Euro rallies as Italy concerns fade, investors eye data

Euro rallies as Italy concerns fade, investors eye data

The EU's statistics authority, Eurostat, said inflation in the eurozone jumped to 1.9% in May, a sharp pick-up from the 1.2% recorded in April.

Yields on Italy's key 10-year bonds surged to 235 points above those of benchmark German bunds, its highest level in more than four years, in a sign of falling confidence among investors. United States stocks were poised for a solid open, with Dow futures and the broader S&P 500 futures up 0.5 per cent.

The EURUSD pair saw increased activity across Thursday's trading session as the pair was influenced by back to back news from both European and U.S. markets.

Japan's Nikkei 225 fell 0.6 percent to finish at 22,358.43 while South Korea's Kospi lost 0.9 percent to 2,457.25.

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It will be headed by a political novice whose first try was rejected four days earlier as too risky for the Italian economy, but the outcome avoids an interim, technical government and a swift return to the polls that investors had feared could end up being a referendum on staying with the euro currency. The CAC 40 in France though, underperformed, trading 0.4 per cent lower at 5,415.

Investors piled into safe-haven bets as political turmoil in Italy sparked fears of another euro crisis, driving up the Japanese yen and pushing the US dollar to a 10-month high against the euro. It had hit a 10-month low of $1.1510 on Tuesday.

Two populist parties failed to form a government on Sunday after Italy's president refused to accept their euroskeptic nominee for the post of finance minister. The ECB's benchmark interest rate now stands at minus 0.40 percent. The Shanghai Composite Index sank 0.6 percent to 3,116.59. That's the highest rate since April a year ago and brings the headline inflation rate up to the ECB's goal of just below 2 percent. Hong Kong's Hang Seng index fell 0.7 percent to 30,590.00. Shares fell in Southeast Asia and Taiwan.

Also on Wednesday, the OECD warned that Italy's political chaos, along with the Brexit negotiations, poses a major risk to the European economy.

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The Treasury official also said that G7 countries are likely to ask Mnuchin about pending US steel and aluminium tariffs that could become effective as early as Friday as exemptions for Canada and the European Union expire.

USA crude futures stood at $66.80 per barrel after falling for five sessions.

Concerns about a trade war hampered the dollar against the yen.

Oil prices remained under pressure from expectations that Saudi Arabia and Russian Federation would pump more crude, even as USA oil output rises.

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Energy had the highest rate of inflation at six per cent, reflecting increased oil and gas prices, followed by food, alcohol and tobacco on 2.6 per cent, services on 1.6 per cent and industrial goods on 0.2 per cent.