- October 9, 2018
- Posted by: Trading
- Category: News
Investing.com – The dollar continued to rack up gains against its rivals on Monday, supported by a drop in the euro on Italy budget concerns and expectations for continued Federal Reserve rate hikes amid a positive U.S. economic backdrop.
The , which measures the greenback against a trade-weighted basket of six major currencies, rose by 0.21% to 95.51.
The euro started the week on the back foot, underpinning a rise in the dollar as investors fretted about the deepening rift between Italy and the European Commission over the country’s proposed 2019 fiscal budget target at 2.4% of GDP.
Italy insisted Monday it would “not retreat” from its spending plans despite the European Commission’s warning that the country’s budget deficit breached past commitments.
fell 0.39% to $1.1479, with analysts at Societe Generale (PA:) warning that the single currency is unlikely to “rediscover its mojo” until the budget issue between Italy and the European Commission is resolved.
A weaker sterling also supported the dollar amid worries that the UK is unlikely to reach an agreement with the European Union on an Irish border deal, a crucial part of securing a Brexit deal, before the EU Summit at the end of October.
fell 0.40% to $1.3066.
The greenback’s positive start to the week comes as analysts touted further upside, citing expectations for continued Federal Reserve rate hikes and strong U.S. economic growth.
“The hawkish sentiments expressed by Fed Chair Powell last week and buoyant U.S. economic data suggest that the Fed is likely to press ahead with its policy of progressive rate hikes at least for another couple of quarters,” Rabobank said.
Still, gains in the greenback were limited by an upbeat outing for the yen amid an increase in risk-aversion as global markets sold off. Trading volumes were thin, however, owing to the absence of Tokyo and holidays in Canada and the US.
fell 0.62% to Y113.01.
Elsewhere, rose 0.22% to C$1.2969 as a slump in oil prices supported the oil-price sensitive loonie.
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