A new political crisis in Italy has resulted in a steep fall of the common currency Euro as Silvio Berlusconi comes back into the picture like a whirlwind, pulling his party ministers out of government over the weekend and calling for fresh elections. That resulted in the current Italian Prime Minister to move for new elections. Meanwhile across the ocean, the imminent probability of a government shutdown in Washington, D.C. is weighing heavily on the U.S. Dollar as officials from both sides of the aisle debate the new health care program.
As a result, currency players moved quickly into the safe haven currencies, i.e. the Japanese Yen and the Swiss Franc. As reported at 11:22 a.m. (JST) in Tokyo, the EUR/JPY pair dipped to a 3-week trough at 131.38 Yen while the EUR/CHF pair traded at 1.2218 Swiss Frances, a loss of 0.3% and a level untouched in nearly three months. The USD/JPY pair hit a 1-month trough trading at 97.53 Yen, but edged higher against the Euro with the EUR/USD pair slipping to $1.3491, a loss of 0.2%.
U.S. Government Stalemate
Once again, the U.S. Federal government finds itself on the brink of a shut down, with a midnight deadline looming. Another even larger political battle looms even if this one finds a solution and that is another increase in the government’s borrowing authority by mid-October.