The euro fell another third of a percent against the dollar on Wednesday, as concerns around a resurgence in political risk to the single currency project drove its worst run of daily losses in almost two months.
Japan's former currency czar Eisuke Sakakibara said the dollar could fall below 100 yen by year-end on U.S. President Donald Trump's perceived support for a weak dollar, but cautioned that any yen-selling intervention by Tokyo might be counterproductive.
Sterling skidded to its lowest levels—bar a "flash crash" in October—in 32 years on Monday, hit by fears that Prime Minister Theresa May will say on Tuesday that Britain is set for a "hard" Brexit out of the EU and its single market.
The dollar limped toward it worst week in two months on Friday as softer-than-expected trade data from China added to signs that investors may be falling out of love with the post-U.S. election Trump trade.
So, Donald Trump finally spoke and down went stocks and the dollar. Shares of biotech stocks took a hit after the President-elect signalled that his U.S. government would negotiate aggressively on the price it pays for drugs. The U.S. dollar/Japanese yen currency pair, which tends to correlate positively with stocks, slumped.
Gold's stronger showing so far has been in response to several things, including a “risk off” trade that was triggered Tuesday afternoon, but mainly due a weaker dollar. Indeed, something rather odd happened across the financial markets on Tuesday afternoon. Up until 15:00 GMT it had appeared as if it was “risk on” at the start of the New Year: the UK’s FTSE 100 had broken to a new record high, crude oil prices had surged to multi-year highs and the euro/U.S. dollar (EUR/USD) currency pair had dropped to a new 14-year low.
A short-lived surge in the euro dominated this year's last day of trade in major foreign exchange markets on Friday, with dealers citing a handful of orders as driving the dollar to its lowest since Dec. 8.