Euro Slips Against the Dollar, Italy’s Coalition

On Thursday the euro continued its 3 week decline against the dollar with investors nervous awaiting the results of a coalition government following weeks of intense negotiations.

The euro fell 0.2 percent to $1.1787, resulting in investors who had taken positions against the dollar who had bet it would fall in 2018 rushing to cover their positions, which helped to rally the dollar.

On Thursday fresh 10 year Treasury yields were at their highest since 2011 which also helped the dollar. Against the Japanese yen, the dollar was at a four month high trading up 0.3 percent at 110.70.

Italian Coalition Negotiations

The inconclusive election result in Italy has resulted in weeks of intense negotiations between the anti-establishment 5-Star Movement and the anti-immigrant League.

News reports say that they working on a draft coalition program in which they will ask for a 250 billion euro debt from the European Central Bank to be wiped off the slate.

Exit the Eurozone

Bothe the 5-Star Movement and the anti-immigrant League are seeking to exit the Eurozone rejecting the imposed budget limitations by Brussels. They are also looking to exit the Eurozone and renegotiate budgetary restrictions and regulation.

Markets are sceptical as to whether they will actually go through with the plan, playing down the political instability and the impact it will have on the euro zone.

According to analyst at City Index, Ken Odeluga who said that the sheer outlandishness has helped ease the concerns of investors a bit.

The political uncertainty in Italy is weighing on the Eurozone and the euro, which has slumped $1.24 over the past 3 weeks.

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Dollar Index Gains

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What’s more, the sterling value also fell against the dollar and the euro to $1.35 and £1.144 respectively. Last month the sterling was trading at 8 cents higher against the dollar at $1.43.

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Oil Companies Also Benefiting

The recent fall in the pound sterling saw BP and Shell oil companies benefiting from the fall and were amongst the strongest risers.

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