Euro sinks in Asian trade

“With growth continuing to slow…and now this political risk in the eurozone, until there is some resolution we believe it’s unlikely the European Central Bank will stop quantitative easing”, said David Zahn, a money manager at Franklin Templeton.

The euro strengthened against the dollar on Thursday, climbing half a percent to a three-day high of US$1.1724, after having risen 1.1% the previous day, its second-biggest daily gain this year.

The commission has proposed this week to increase European Union funding for Italy’s poorest regions in the next EU long-term budget for 2021-2027.

The benchmark 10-year Treasuries yields in the U.S. touched the 2.8% mark, while the 10-year gilts’ yields fell.

This glum mood extended to Asia too.

MSCI’s main European index slipped 0.8 percent while its Asian counterpart rose 0.3 percent as a retreat in oil prices from record highs helped sentiment.

CURRENCIES: The dollar edged up to 109.41 yen from 109.40 yen in late trading Friday.

But in the wake of Italy’s political and bond market turbulence, some are looking for a June signal that the program of bond buys will carry on at least until the end of the year, and possibly beyond.

Italy has been without a government since inconclusive elections on 4 March, when voters backed anti-establishment and far-right parties the 5-Star Movement and League Nord, leaving a hung parliament. “The markets will be really unable to move forward into a different narrative” until the Italian outlook is clearer.

The U.S. announcement pushed stocks lower, although a weaker yen supported Japanese stocks and firm exports boosted South Korean markets. The day-off extended to markets in Singapore, Malaysia, Indonesia and Thailand. Savona, meanwhile, will be shifted to European affairs minister. The parties will likely keep negotiating, and contentious talks between the US and China are due to resume during the weekend. Trump tweeted that a US team is in North Korea to make arrangements for the planned June 12 summit in Singapore, days after he said the USA was withdrawing from the meeting.

The US Automakers’ report for May is also due on Friday.

On Friday, about 230 yuan-denominated mainland A-shares were included in MSCI index for the first time.

U.S. Commerce Secretary Wilbur Ross is expected to travel to Beijing next week to try to work out details of Chinese purchases of U.S. goods aimed at reducing the U.S. trade deficit with China, following up on announcements made by Chinese and Trump administration officials earlier this month. The topic of ZTE will also be discussed. The Dow dropped more than 400 points, while key indices in London, Spain and Italy fell.

New figures showed that eurozone inflation was expected to be 1.9 per cent in May, up from 1.2 per cent in April, according to a flash estimate from Eurostat, the statistical office of the EU. The 1.4% drop is the biggest it has experienced in the last 10 weeks.