By William L. Watts and Lisa Twaronite, MarketWatch
FRANKFURT (MarketWatch) — The euro tumbled to a two-week low versus the dollar and threatened to revisit record-low territory against the Swiss franc Monday on fears that Europe’s debt crisis could engulf Italy.
Top officials of the European Council, the European Central Bank and the European Commission met Monday ahead of a gathering of euro-zone finance ministers in Brussels. Read more on emergency euro-zone meeting.
By William L. Watts and Lisa Twaronite, MarketWatch
FRANKFURT (MarketWatch) — The euro tumbled to a two-week low versus the dollar and threatened to revisit record-low territory against the Swiss franc Monday on fears that Europe’s debt crisis could engulf Italy.
Top officials of the European Council, the European Central Bank and the European Commission met Monday ahead of a gathering of euro-zone finance ministers in Brussels. Read more on emergency euro-zone meeting.
“If the Italian bond market continues to fall, Japanese investors may need to sell Italian bonds, which in turn is likely to be negative” for the euro against the yen, Tohru Sasaki, head of Japan rates and foreign-exchange research at J. P. Morgan Chase in Tokyo, said in a note to clients Monday.
Fears over Europe’s sovereign debt woes pressured European equities and weighed on U.S. stock-index futures, fueling for the dollar and other safe-haven currencies, analysts said.
The dollar index DXY +0.98% , which measures the U.S. unit’s value against a basket of six other major currencies, traded at 75.706, up from 75.179 late Friday.
Against the Japanese yen, the dollar USDJPY +0.12% bought ¥80.67, little changed from ¥80.65 late Friday.
Japan holdings of U.S. debt
Japanese investors are also major buyers of U.S. debt, so the yen is sensitive to changes in U.S interest rates. Lower rates make foreign investors less inclined to buy U.S. debt, and rates dropped after a disappointing jobs report. Read story on falling U.S. bond yields.
The dollar’s upside was also limited by concerns about the impasse on the U.S. debt ceiling. A Sunday meeting between U.S. President Barack Obama and congressional leaders ended earlier than some had expected, with talks scheduled to resume Monday. Read more on U.S. debt impasse talks.
“News over the weekend that talks over the U.S. budget deficit and debt ceiling broke down as Republican pulled out of discussions will leave [dollar] bulls with a sour taste in their mouth,” Mitul Kotecha, head of global foreign-exchange strategy at Credit Agricole, said in a note to clients Monday.
The greenback also gained against the British pound GBPUSD -0.51% , which bought $1.5953 compared with $1.6037 late Friday. It also rose against the Australian dollar AUDUSD -0.69% , which was changing hands at $1.0698, down from $1.0748.
William L. Watts is a reporter for MarketWatch in Frankfurt.
Lisa Twaronite is MarketWatch's Tokyo bureau chief.
