European Stock Markets
The euro gained on Monday as a fall in U.S. Treasury yields dragged
down the dollar, but trading was relatively quiet ahead of several
speeches by central bankers and key political developments in Germany
and Italy.
With the dollar’s bounce since it hit a three year-low on
Feb. 16 fizzling out, the euro was able to rise 0.3 percent and climb to
$1.2328.
But the euro remains 2 cents off its recent
highs of more than $1.25 - the currency has rallied this year on the
back of dollar weakness - and analysts said investors were cautious
about taking big positions this week due to political risks.
Italians
vote in a national election on Sunday, while the leading political
parties in Germany, Europe’s biggest economy, will decide on a coalition
deal that could secure Angela Merkel a fourth term as chancellor.
Analysts
pointed to weekly futures data that showed net long positions in the
euro had fallen for a third consecutive week. European Central Bank
President Mario Draghi’s appearance in the European Parliament on Monday
and euro zone inflation data due later this week also add to a nervous
outlook for euro trading.
The dollar index, which
measures the greenback against a basket of six major rivals, eased 0.2
percent to 89.685. It gained nearly 0.9 percent last week and pulled
away from a three-year low near 88.25 set on Feb. 16.
A
view that the dollar’s sell-off had been overdone, plus minutes from the
Fed’s January rate-setting meeting that offered a relatively upbeat
tone, helped give the dollar a lift last week.
The dollar fell 0.1 percent versus the yen to 106.65 and erasing some of its earlier losses in Asian trading.
While
stock markets started the week on a solid footing and pointed to strong
risk appetite, futures data suggested foreign exchange investors were
cutting their risk exposures, albeit from high levels.
Positions in risk-related foreign exchanges, particularly sterling and the Canadian dollar, fell, according to the data.
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