G-10 currencies were muted on Monday and a popular gauge of the U.S. dollar gave back some modest gains, as investors awaited an important central bank retreat in Jackson Hole, Wyo., later this week.
Elsewhere, the focus remained on Turkey, which suffered renewed losses on Monday following sovereign credit downgrades late Friday.
The ICE U.S. Dollar Index
DXY, +0.00%
which measures the buck against six rivals, was little changed at 96.091, after recording its first weekly loss in a month last week.
With little economic data on deck this week, market participants are focused on the central banker symposium at Jackson Hole that kicks off later in the week. Federal Reserve Chairman Jerome Powell is due to speak on Friday at 10 a.m. Eastern.
The euro
EURUSD, +0.0087%
last fetched $1.1441, also little changed from Friday, having retraced some earlier losses and holding above a psychologically important $1.14 threshold.
The common currency’s moves come as Monday marks the end of Greece’s eight-year bailout drama, with worries instead shifting to the health of Italy, the fourth-largest economy in the eurozone.
Following last week’s fatal collapse of a bridge in Genoa, “Italy’s 5 star party is proposing a massive €80 billion budget spend to upgrade the country’s infrastructure. Such a huge increase in spending would massively violate the union’s budget rules, but Italy’s ruling party seeks to invoke the ‘golden rule’ championed by Britain’s Gordon Brown to remove chunks of public investment from the headline budget deficit,” wrote Boris Schlossberg, managing director of FX Strategy at BK Asset Management.
On top of that, investors worry about contagion risk from Italian and Spanish banks’ exposure to Turkish assets.
See: Why Turkey’s currency crisis is rattling Europe bank stocks and the euro
The Turkish lira
USDTRY, +2.1410%
remained in focus on Monday, sliding the most against the U.S. dollar in the early hours of New York trading after S&P Global Ratings and Moody’s Investors Service cut Turkey’s credit rating. S&P lowered the rating to BB- from B+, officially putting it into the riskier high-yield category, while Moody’s cut it to Ba3 with negative outlook from Ba2.
Read: Turkey’s woes won’t trigger a full-blown crisis across emerging markets, economist says
One dollar last bought 6.1803 lira, up from 6.0158 lira late Friday in New York. The euro fetched 7.0719 lira, up 2.8% from Friday, according to FactSet.
The lira’s dramatic slide over the past weeks and Turkey’s diplomatic spats with the U.S. and earlier in the year also Germany, have given the Turkish currency crisis geopolitical importance too. German politician and chief of the Social Democrats, Andrea Nahles, suggested Germany may have to put its political differences to bed and help Turkey out, but earned blazing criticism for her words.
Last week, Turkey announced it would receive a $15 billion direct investment package from Qatar.
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Source : MTV
