Politics weigh heavy on euro and dollar

Published: 30 Sep at 9 AM Tags: Euro, Dollar,

The euro has been hit hard by the political crisis in Italy and the dollar has also fallen against the yen as a possible government shutdown in Washington looms. The safe haven yen has done well out of the possible turmoil, as has the Swiss franc. The euro is currently down to 131.38 yen, a drop from 132.78 yen. The single currency has also hit its lowest point since June to end at 1.2218 Swiss francs.

Against the Japanese currency the dollar has slid to 97.53 yen, the lowest it has been in a month. However the greenback has managed to outperform the euro which dropped to $1.3491, a loss of 0.3 per cent.

The euro is suffering from a decision by former Italian Prime Minister Silvio Berlusconi to pull his ministers from government. Current Prime Minister Enrico Letta now faces a vote of confidence on Wednesday.

In the US a debate over President Obama’s health programme has been tied up to funding measures. Most analysts believe the government is heading towards a shutdown. Risk aversion has also weighed heavy on the commodity currencies. The Australian dollar is now down 0.3 per cent to $0.9292, the lowest it has been in two weeks.

However the problems in the US and Europe have been outshone by positive data coming out of China indicating that the world’s second largest economy is emerging from a slowdown.