Dollar vulnerable as Italy crisis cools, European Union inflation picks up

Dollar vulnerable as Italy crisis cools, European Union inflation picks up

Dollar vulnerable as Italy crisis cools, European Union inflation picks up

Political worries also battered Italy's government bonds, putting renewed pressure on the euro.

Milan's stock index opened slightly higher Wednesday after Asian markets slid on investor concern that a new election could become a referendum on whether Italy will stick with the euro currency.

Short-dated Italian bond yields - one of the most sensitive gauges of political risk - soared as much as 80 basis points to their highest since late 2013 as investors' anxiety deepened. The euro sank to $1.1577 from $1.1669. Google's parent company Alphabet lost 1.5 percent to $1,068.21 and Mastercard fell 2.3 percent to $186.80.

Shares in Italian banks Banco BPM (BAMI.MI), BPER (EMII.MI), UBI (UBI.MI) and Intesa Sanpaolo (ISP.MI) were among the biggest risers on the STOXX, up between 3.3 percent to 8.5 percent after sustaining heavy losses in the previous month.

Technology companies, which get more of their revenue from outside the USA than any other part of the S&P 500, also fell.

The Treasury official said it was unclear who would be representing Italy at the G7 finance ministers and central bank governors' meeting on Thursday, Friday and Saturday in Whistler, Canada. "I see a lot of uncertainty, which results in a lot of volatility".

Juncker said at a conference Thursday that "Italians have to take care of the poor regions of Italy".

Pedro Sanchez was nearly certain to become Spain's new leader after his Socialist party secured enough votes to force Mariano Rajoy from office in a no-confidence vote on Friday that will throw the political spotlight onto a second southern European state. They bought government bonds in the U.S.as well as Germany and the U.K. That sent prices for those bonds higher and yields lower. Madrid's IBEX bourse was down nearly 2 per cent.

Japan's Nikkei 225 stock index dropped 1.5 percent to 22,018.52.

E-Mini futures for the S&P500 also gave up early gains to be down 0.5 per cent.

The turmoil hit US bank shares and caused a sell-off of euro assets and a rush into safe-haven Treasury debt, sending the dollar to a 10-month high against the euro.

Against the greenback, the Canadian dollar strengthened as much as 1.4 percent on Wednesday after the country's central bank held interest rates steady but suggested that it could raise rates soon, possibly as early as July. "This should keep the risk trades pressured to the downside", Nick Twidale, Sydney-based analyst at Rakuten Securities Australia.

"Worries over geopolitics look set to hit Asia after sweeping through Europe and also the United States at the start of the week". Trump tweeted that a US team is in North Korea to make arrangements for the planned June 12 summit in Singapore, days after he said the USA was withdrawing from the meeting.

NORTH KOREA: Diplomacy accelerated Tuesday ahead of a potential summit between President Donald Trump and North Korean leader Kim Jong Un as a team of American diplomats involved in preparatory discussions left a Seoul hotel, possibly to continue talks with their North Korean counterparts. Yields move inversely to price.

The ECB could just hint at an extension to QE while taking another six weeks to see how the political situation in Italy and the trade conflict with the US play out, and take in more economic data, said the economist.

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