U.S. Dollar Rises Versus Euro on Italian Debt Risk
17 May 2018 - 2:29AM
Dow Jones News
By Daniel Kruger
The U.S. dollar edged higher Wednesday, fueled by a gain against
the euro, as longer-term U.S. government bond yields rose
modestly.
The WSJ Dollar Index, which measures the currency against a
basket of 16 others, advanced less than 0.1% to 86.96. The dollar
rose 0.4% against the euro, touching its highest level against the
unified currency since Dec. 18.
The dollar's rise relative to the euro was fueled by concerns
about the formation of a new governing coalition in Italy. Two
Italian antiestablishment parties are seeking to set up a coalition
government that would advocate for procedures for countries that
use the euro to exit from the European Currency Union. Yields on
Italian government 10-year bonds rose to 2.089% from 1.950%.
Investors are "waking up to Italian political risk," said Alvise
Marino, a currency strategist at Credit Suisse Group.
The dollar weakened earlier as U.S. government bond yields
briefly fell, pushed lower by signs of geopolitical unease, ranging
from new uncertainties about talks between the U.S. and North
Korea, the potential for an antiestablishment governing coalition
in Italy and concerns about talks to revise the North American Free
Trade Agreement.
Analysts have credited the recent rise in U.S. government bond
yields, as well as the increasing differential between those yields
and government bond yields in Germany, with boosting demand for the
greenback. Higher interest rates typically attract investors to a
currency because they offer a higher rate of return.
Write to Daniel Kruger at Daniel.Kruger@wsj.com
(END) Dow Jones Newswires
May 16, 2018 12:14 ET (16:14 GMT)
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