Italy and Spain Uncertainty Weighs on Euro

The euro fell against the yen, adding to yesterday’s decline which was the biggest since June, amid corruption allegations against Spanish Premier Mariano Rajoy and uncertainty ahead of Italian elections this month.

The 17-nation currency halted this year’sgain against the dollar before European Central Bank policy makers meet on Feb. 7. The yen climbed against all its major peers as investors bought haven assets after global equities slid yesterday by the most in almost three months. Australia’s dollar remained higher after an advance yesterday against the greenback before a meeting at which Reserve Bank policy makers are predicted to keep borrowing costs unchanged.

“The risks are to the downside for euro and a correction back towards $1.34 seems very logical, given the speed with which we’ve moved so far,” said Robert Rennie, the chief currency strategist at Westpac Banking Corp. (WBC) in Sydney. Purchasing euro-zone assets becomes difficult “once you start to become concerned about the outlook for European politics.”


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