October 8, 2018 / 6:48 PM / 2 months ago

FOREX-Euro hits 7-week low on Italy budget row, yuan falls

    * Spot yuan posts biggest daily drop in eight months  
    * China cuts bank reserve requirement, U.S. eyes weak yuan
    * Sterling slips as traders re-assess chances on Brexit deal
    * Dollar index rises on upbeat data, safe-haven demand 
    * Graphic: World FX rates in 2018 tmsnrt.rs/2egbfVh

 (Updates market action, adds quote)
    By Richard Leong
    NEW YORK, Oct 8 (Reuters) - The euro fell to a seven-week
low against the dollar on Monday on a spat between Italy and the
European Union over Rome's budget plans, while the yuan weakened
as Beijing's move to spur more lending failed to ease concern
about economic growth.
    Sterling retreated as traders booked profits on recent gains
tied to optimism about a Brexit deal.
    Nervous investors piled more money into the dollar, as 
speculators' bullish bets in the greenback grew to their highest
level since December 2016 last week. 
    The greenback's gain was limited by a third day of losses on
Wall Street, which was stoked by anxiety about the U.S.-China
trade tension and rising U.S. bond yields.

    "What’s been weighing on broader markets has been supporting
the dollar: rising interest rates around the world for both
fundamental and worrisome reasons," said Joe Manimbo, senior
market analyst at Western Union Business Solutions in
Washington. "Italian borrowing rates have climbed, a sign of
investor worry in the nation’s debt crisis." 
    On Monday, Italian 10-year bond yield increased
nearly 20 basis points to 3.60 percent, the highest level in
4-1/2 years, while the country's stock market fell to
its weakest since April 2017. 
    Italian Deputy Prime Minister Matteo Salvini, speaking at a
media conference with French far-right leader Marine Le Pen,
denounced European Commission President Jean-Claude Juncker and
Economics Commissioner Pierre Moscovici as enemies of Europe.
  
    The single currency fell 0.26 percent against the dollar
 to $1.14900 and not far from a more-than one-year low
of $1.1355 hit in mid-August.
    The euro fell 0.31 percent to 1.14015 Swiss franc
, and shed 0.92 percent against 129.790
yen. 
    YUAN FALLS
    The Chinese currency ended at its lowest official
close in seven weeks at 6.9315 yuan per dollar despite the
latest attempt from Beijing to calm investor worries about the
trade war between China and the United States.
    On a spot basis, the yuan tumbled 0.9 percent for its
steepest one-day loss in eight months, Refinitiv data showed.
    China's central bank on Sunday announced a steep cut in the
level of cash that banks must hold as reserves, marking the
fourth such decrease this year. 
    The United States remains concerned about China's recent
currency depreciation, a senior Treasury official said on
Monday.
    The pound fell 0.24 percent to $1.3093, reversing
some of its gains last week, as markets focused on any
substantial breakthrough in Brexit negotiations as Britain moves
nearer to an exit deal with the European Union.
    EU Brexit negotiators believe a deal with Britain on leaving
the bloc is "very close", sources said, in a sign that a
compromise on a major sticking point - the future Irish border -
might be in the making.
    The dollar continued its recent march higher on upbeat
domestic economic data and safe-haven demand amid geopolitical
concerns.
    U.S. stock prices fell on Monday, reducing some of the
greenback's appeal. The S&P 500 index was down 0.2
percent in mid-afternoon trading.
    An index that tracks the greenback against a basket of major
currencies was up 0.13 at 95.744.
    The U.S. bond market was closed for the Columbus Day
holiday. On Friday, the 10-year yield touched a seven-year peak
of 3.248 percent.
========================================================
    Currency bid prices at 2:32PM (1832 GMT)
 Description      RIC         Last           U.S. Close  Pct Change     YTD Pct     High Bid    Low Bid
                                              Previous                   Change                 
                                              Session                                           
 Euro/Dollar      EUR=        $1.1490        $1.1523     -0.29%         -4.22%      +1.1534     +1.1460
 Dollar/Yen       JPY=        112.9600       113.7000    -0.65%         +0.26%      +113.9400   +112.8300
 Euro/Yen         EURJPY=     129.78         130.99      -0.92%         -3.99%      +131.2400   +129.5200
 Dollar/Swiss     CHF=        0.9925         0.9916      +0.09%         +1.87%      +0.9944     +0.9908
 Sterling/Dollar  GBP=        1.3091         1.3122      -0.24%         -3.12%      +1.3134     +1.3030
 Dollar/Canadian  CAD=        1.2955         1.2935      +0.15%         +3.01%      +1.3010     +1.2938
 Australian/Doll  AUD=        0.7079         0.7051      +0.40%         -9.26%      +0.7081     +0.7042
 ar                                                                                             
 Euro/Swiss       EURCHF=     1.1402         1.1429      -0.24%         -2.46%      +1.1442     +1.1382
 Euro/Sterling    EURGBP=     0.8776         0.8784      -0.09%         -1.20%      +0.8806     +0.8773
 NZ Dollar/Dolar  NZD=        0.6451         0.6441      +0.16%         -8.96%      +0.6453     +0.6425
 Dollar/Norway    NOK=        8.2735         8.2589      +0.18%         +0.81%      +8.2988     +8.2570
 Euro/Norway      EURNOK=     9.5081         9.5160      -0.08%         -3.46%      +9.5250     +9.5026
 Dollar/Sweden    SEK=        9.0905         9.0635      +0.01%         +10.84%     +9.1287     +9.0603
 Euro/Sweden      EURSEK=     10.4465        10.4459     +0.01%         +6.17%      +10.4620    +10.4380
 
    
 (Additional reporting by Saikat Chatterjee in London
Rodrigo Campos in New York
Editing by Louise Ireland and Susan Thomas)
  
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