The euro traded 0.2 percent from a four-month low versus the dollar as traders speculated future European bailouts could include the kind of bank deposit levies imposed on Cyprus.
The 17-nation currency headed for its biggest weekly decline in seven with Italian political parties still deadlocked ahead of a deadline today for forming a government. The yen gained against all 16 of its major peers with Bank of Japan (8301) Governor Haruhiko Kuroda set to speak before upper house lawmakers ahead of a policy meeting next week.
“There is concern what’s happened in Cyprus is setting a precedent for what could potentially happen to deposit holders in other parts of the zone,” said Janu Chan, a Sydney-based economist at St. George Bank Ltd. “I suspect Italian politics could weigh on the euro.”
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