(Adds Goldman on Swedish crown, yen options expiry)
* 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, inched up to 112.20 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 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 morning trade in Europe.
"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 0.3 percent lower on the day at $1.0651 by 1220
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.
Opinion polls show Centrist Emmanuel Macron slightly ahead
of conservative Francois 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 119.55, its
lowest since Dec. 5. Dealers said a $2 billion options expiry at
112 yen was likely to stand in the way of further gains before
Prime Minister Shinzo Abe meets Trump on Friday.
Sweden's crown and the Swiss franc,
European alternatives to holding euros whose central banks have
worked to oppose appreciation, gained 0.2-0.3 percent.
"We think that the (crown) currency can continue to
strengthen in the coming months without triggering a response
from the Riksbank," Goldman Sachs analysts said in a morning
note. They forecast the crown at 9.15, 9.00 and 8.70 in 3, 6 and
12 months respectively, compared to 9.4524 on Wednesday.
Both the dollar and yen have also drawn some support from a
return of nerves around China's yuan following the new year
"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)