Euro Under Pressure as Italy’s Struggle Continues
The euro held near 6 ½-month lows on Tuesday as the prospect of early elections remained. European shares declined overnight after the country’s 5-Star and League parties abandoned plans to form a government. An early election could give additional power to populist factions and could call into question Italy’s continued membership in the European Union. Also pressuring the euro is the upcoming vote of confidence that Spanish Prime Minister Mariano Rajoy will face on Friday. The euro was trading at $1.1629 as of 12:52 p.m. HK/SIN. The dollar eased against most of its primary trading partners early on Tuesday. It declined 0.35 percent against the yen to 109.03 and was also lower against the Canadian dollar and the Swiss franc.
Asian markets followed Europe downward, with only Australia’s ASX 200 managing to hold onto gains. The index was up 0.23 percent just after noon in Hong Kong. The Kospi and the Shanghai Composite were both down around 0.58 percent just after noon in Hong Kong while the Nikkei 225 and Hong Kong’s Hang Seng Index were met with steeper losses. The indexes were down 0.85 percent and 0.62 percent respectively.
On Wednesday top trade officials from the United States and the EU will meet in Paris to discuss the aluminum and steel tariffs that are set to go into effect at the end of this week. The European Commission is seeking a permanent exemption from the U.S. tariffs on the grounds that it is a strategic U.S. ally and is not responsible for the global oversupply of steel or aluminum. The tariff exemptions for Canada and Mexico are also set to expire at the end of this week.