The dollar was down by over one percent against the Yen on Monday morning, continuing its slide since its 13-year-high last week. The boost from the ‘Trumpflation trade’ appears to have finally collapsed, leaving the dollar vulnerable, and other currencies higher. The dollar was down 1.2 percent to ¥111.84, while it suffered a lighter drop against a basket of currencies with a 0.6 percent fall. The euro was up by 0.7 percent against the dollar to climb to $1.065 after opening below $1.06. The pound also benefited from the drop, going back above $1.25 from a 0.18 percent rise.
With the absence of economic data from the euro zone, it is unclear what will happen to the euro before the year comes to an end. The European Central Bank president Mario Draghi is set to make an address later in the day. “We do not know whether Draghi will hint at a concrete action plan before the December meeting, yet we are certain that every word that will come out of his mouth would carry an important potential to move the euro markets in one direction, or the other,” said Ipek Ozkardeskaya, a senior market analyst at London Capital Group. Another determining factor will be the outcome of the Italian referendum on Sunday. Connor Campbell, an analyst at Spreadex said “Current polls have the ‘no’ vote winning, something that may trigger the resignation of Renzi and a fresh batch of political instability in Europe. Yet for now the euro doesn’t seem too bothered, continuing to climb away from last week’s lows.”