The euro drifted lower against its key counterparts in the European session on Tuesday, after an Italian lawmaker said that the country would resolve its problems by returning to its own currency.
“I’m totally convinced that Italy would resolve most of its problems with its own currency,” Claudio Borghi, the economic head of the ruling League party, told RAI radio.
“Having control of one’s own means in monetary policy is a necessary condition – although not sufficient – to carry out the ambitious and enormous project of renewal.”
His comments sparked a rally on Italian bond yields, with the yield on benchmark 10-year note rising above 3.4 percent to its highest level since 2014.
European markets were in red, as Brexit worries and renewed concerns about heavily indebted Italy’s budget dented investors’ appetite for risk.
U.S-China trade worries also weighed, as U.S. President Donald Trump stepped up his trade war with Beijing by saying it was “too early” to negotiate with China.
Preliminary data from the Eurostat showed that Euro area producer price inflation slowed for the first time in four months during August.
Industrial producer prices on the domestic market rose 4.2 percent year-on-year following 4.3 percent in July, which was revised from 4 percent. Economists had expected a 3.80 percent increase. Inflation eased for the first time since April.
The currency has been trading in a negative territory against its major rivals in the Asian session, with the exception of the pound.
The euro declined to 1.1505 against the greenback, its lowest since August 21. The euro is likely to find support around the 1.13 region.
The single currency dropped to a 2-week low of 130.71 against the yen, from a high of 132.00 set at 6:30 pm ET. The euro is poised to find support around the 129.00 mark.
Data from the Bank of Japan showed that Japan’s monetary base rose 5.9 percent on year in September, coming in at 498.821 trillion yen.
That follows the 6.9 increase in August.
Having advanced to 1.1394 against the franc at 9:00 pm ET, the euro reversed direction and dropped to a 4-day low of 1.1313. The euro is seen finding support around the 1.12 level.
The euro reversed from an early high of 1.7558 against the kiwi, falling to 1.7486. On the downside, 1.73 is likely seen as the next possible support for the euro.
The common currency fell to near a 1-year low of 1.4768 against the loonie, after having advanced to 1.4838 at 5:30 pm ET. If the euro weakens further, 1.45 is possibly seen as its next support level.
On the flip side, the euro edged up to 0.8900 against the pound, from a low of 0.8867 hit at 3:00 am ET. The next possible resistance for the euro is seen around the 0.90 mark.
Survey data from IHS Markit showed that UK construction sector unexpectedly grew at the weakest pace in six months in September, as all three sub-sectors lost momentum.
The IHS Markit/CIPS UK construction purchasing managers’ index fell to 52.1 from 52.9 in August. In contrast, economists had expected the index to rise to 53.1.
After declining to near a 5-week low of 1.5986 against the aussie at 12:30 am ET, the euro reversed direction and was trading higher at 1.6057. Next key resistance for the euro is likely seen around the 1.63 region.
Looking ahead, at 10:00 am ET, Federal Reserve Governor Randal Quarles will testify before the Senate Banking Committee in Washington DC.
Federal Reserve Chair Jerome Powell speaks about the outlook for employment and inflation at the National Association for Business Economics Annual Meeting in Boston at 12:45 pm ET.