Euro hovers near six-week lows on Italy’s fiscal woes

  • by Ahmed Mamdouh
  • October 2, 2018, 8:3 AM
  • 476 Views
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The euro plunged for a fifth day against the U.S. dollar on Tuesday amid mounting worries regarding the populist Italian government’s fiscal plans.

The EURUSD fell to a low of $1.1524, the lowest in nearly six weeks, extending its plunge after the head of Italy’s lower house budget committee said the nation would have solved its fiscal problems with its own currency.

Italian 10-year bond yield climbed to a peak of 3.442%, the highest since March 2014.

European Economic Affairs Commissioner Pierre Moscovici said that Italy's plans were "obviously" deviating from EU rules on fiscal discipline.

European finance ministers may discuss the melting situation in Italy as they convene in Brussels later today.

Worries from Italy and those coming from the worsening global growth outlook have turned the risk-off mood in financial markets on Tuesday.

European shares opened lower, trailing declines in Asia, as optimism concerning the new US-Canada-Mexico trade deal faded.

IMF managing director Christine Lagarde warned that economic risks have materialized and "there were signs that global growth has plateaued."

The IMF will lower its world growth forecasts next week, especially as the rise in oil prices to four-year high threaten global growth.

Brent crude traded above $85.09 a barrel on Tuesday after hitting a four-year peak of $85.44 the previous session.

The pound plunged to a low of $1.2988, the lowest level since Sept. 12, as Brexit and the annual conference of the governing Conservative Party remained predominant.

Safe havens gold, yen and franc along with the dollar firmed today, ahead of a speech by Fed Chair Jerome Powell.

The dollar index climbed to a three-week high of 95.23, resuming its rebound for a fifth session in a row.

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