October 2, 2018 / 2:08 PM / 2 months ago

FOREX-Euro weakens to 6-week low; Italian concerns weigh

    * Euro drops on Italian concerns
    * Hawkish Fed keeps bid for greenback

 (New throughout, updates prices, market activity and comments
to U.S. market open, new byline, changes dateline, previous
LONDON)
    By Karen Brettell
    NEW YORK, Oct 2 (Reuters) - The euro fell to a six-week low
on Tuesday after a senior lawmaker in one of Italy's ruling
parties said most of the country's problems would be resolved if
it readopted a national currency.
    Italy's coalition proposed a budget with a
higher-than-expected deficit target, exacerbating tensions with
other euro zone leaders and worrying investors who want Rome to
bring its debt under control.
    The lawmaker, Claudio Borghi, later rowed back on the
comments, while Prime Minister Giuseppe Conte said the euro was
"unrenounceable".
    The single currency dropped as low as $1.1505, its
weakest since Aug. 21, before retracing to $1.1537, down 0.34
percent on the day.
    "We are dealing with a war of words, with the euro on one
side and Italy on the other ... There's a lot of headline risk
about," Credit Agricole head of G10 FX Strategy Valentin Marinov
said.
    Most of the common currency's losses came after Borghi, the
economic head of the right-wing League party, said Italy would
enjoy more favorable economic conditions outside the euro zone.

    The euro has strong technical support at the $1.15 area,
which is the 50 percent retracement level of its rally from
August to September, said Win Thin, global head of currency
strategy at Brown Brothers Harriman in New York.
    A break below this level could mean further euro weakness to
the $1.13 area, Thin said.
    The Australian dollar, often viewed as a barometer of
risk appetite, fell 0.58 percent to $0.7181 as markets worldwide
were spooked by the euro zone concerns. The Reserve Bank of
Australia earlier held interest rates at 1.5 percent, a widely
expected decision.
    As the euro's weakened, the U.S. dollar kept pushing higher
even though investor positioning in the greenback looks
stretched.
    “The main driver is the U.S. Fed, they signaled they are
comfortable with the U.S. economy to continue hiking rates,”
said Thin.
    The U.S. dollar has strengthened against the euro since
Wednesday, when the Federal Reserve raised interest rates as
expected and said it foresees another rate hike in December,
three more next year and one in 2020.
    The dollar index rose 0.28 percent to 95.563, after
getting as high as 95.744, the highest since August 21.
    
========================================================
    Currency bid prices at 9:49AM (1349 GMT)
 Description      RIC         Last           U.S. Close  Pct Change     YTD Pct     High Bid    Low Bid
                                              Previous                   Change                 
                                              Session                                           
 Euro/Dollar      EUR=        $1.1537        $1.1576     -0.34%         -3.83%      +1.1580     +1.1506
 Dollar/Yen       JPY=        113.7500       113.9100    -0.14%         +0.96%      +114.0100   +113.6200
 Euro/Yen         EURJPY=     131.24         131.88      -0.49%         -2.91%      +131.9900   +130.7300
 Dollar/Swiss     CHF=        0.9837         0.9837      +0.00%         +0.98%      +0.9853     +0.9830
 Sterling/Dollar  GBP=        1.2964         1.3041      -0.59%         -4.06%      +1.3055     +1.2942
 Dollar/Canadian  CAD=        1.2816         1.2810      +0.05%         +1.90%      +1.2839     +1.2799
 Australian/Doll  AUD=        0.7181         0.7223      -0.58%         -7.95%      +0.7237     +0.7163
 ar                                                                                             
 Euro/Swiss       EURCHF=     1.1351         1.1389      -0.33%         -2.89%      +1.1394     +1.1314
 Euro/Sterling    EURGBP=     0.8899         0.8879      +0.23%         +0.18%      +0.8908     +0.8867
 NZ Dollar/Dolar  NZD=        0.6588         0.6612      -0.36%         -7.03%      +0.6614     +0.6576
 Dollar/Norway    NOK=        8.1776         8.1482      +0.36%         -0.36%      +8.2128     +8.1500
 Euro/Norway      EURNOK=     9.4372         9.4366      +0.01%         -4.18%      +9.4526     +9.4325
 Dollar/Sweden    SEK=        8.9985         8.9442      +0.26%         +9.72%      +9.0275     +8.9439
 Euro/Sweden      EURSEK=     10.3839        10.3574     +0.26%         +5.54%      +10.3912    +10.3540
 
 (Additional reporting by Tommy Wilkes in London; Editing by
David Gregorio)
  
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