* Euro down another third of a percent from Tuesday close
* Gains for dollar index minimal as yen gains
* Graphic: World FX rates in 2016 tmsnrt.rs/2egbfVh
By Patrick Graham
LONDON, Feb 8 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.
The yen, however, was up another quarter of a percent at
112.12 per dollar, a move towards the perceived security of
Japan pointing to the growth in concerns around global political
risks and the Trump presidency that has dominated recent days.
The dollar was wobbling at the start of this week, a low
wages number having quashed bets on a rise in U.S. interest
rates in March and cooled expectations for the scale of monetary
tightening this year.
Concerns over the impact on the world economy of President
Trump's protectionism and immigration policy have also weighed
on the greenback, along with the new administration's hints that
it would prefer a weaker dollar.
Over the last two days, however, that has all played second
fiddle to France's presidential election race and question marks
over further international financial support for Greece. The
dollar index had its best day in a month on Tuesday and it was
up another 0.3 percent in early deals in Europe on Wednesday.
"The French political noise has brought the euro down and
that has given the dollar a reprieve," said Gavin Friend, a
strategist with National Australia Bank in London.
"Markets know that if Trump was to come out and start
talking about tax reform and infrastructure spending, the dollar
would go up. The dollar rose a long way at the end of last year,
it has come back, now we are sitting around waiting for the next
Having fallen as low as $1.0643 in Asian time, the euro
traded 0.2 percent lower on the day at $1.0660 by 0850
Uncertainty about the two rounds of the French presidential
election on April 23 and May 7 drove the premium that investors
demand for holding French over German government debt to its
highest in more than four years.
Centrist Emmanuel Macron was forced on Tuesday to deny an
extramarital affair and conservative Francois Fillon pressed on
with efforts to salvage his reputation after accusations that he
used taxpayers' money to pay his wife for work that she may not
Opinion polls show Macron slightly ahead of Fillon in the
first round, but behind far-right National Front leader Marine
Le Pen, who has vowed to pull France out of the euro zone and
hold a vote on its membership in the European Union.
Against the yen, the euro lost half a percent to 119.48, its
lowest since Dec. 5.
Both the dollar and yen have drawn some support from a
return of nerves around China's yuan following the new year
holiday. Beijing's foreign exchange reserves unexpectedly fell
below the $3-trillion level last month for the first time in
nearly six years.
"After the difficult first few weeks of the year, we see
more strength for the dollar coming through," said Alessio de
Longis, a portfolio manager and macro strategist with
Oppenheimer Funds in New York.
"My goal would still be the euro approaching parity over the
course of this year."
(Writing by Patrick Graham; Editing by Andrew Heavens)