Early trade in New York: Euro declines against dollar amid political uncertainty

The euro fell to a one-week low against the dollar on Monday on concerns over French politics ahead of the presidential vote in April as well as other impending elections in Europe in a year of political uncertainty. "Political risk is serving to dampen the euro after last week's stumble from the $1.08 area," said Shaun Osborne, chief FX strategist, at Scotiabank in Toronto.
German factory orders rose 5.2 percent in December, the biggest monthly increase in 2 1/2 years, but the data had little market impact. Investors were largely focused on French politics, as far-right National Front leader Marine Le Pen launched her presidential bid, vowing to fight globalisation and take France out of the euro zone.
In Italy, another presidential election looms even as former Italian prime minister Matteo Renzi said he was willing to shelve his push for early voting.
In mid-morning trading, the euro fell 0.5 percent against the dollar to $1.0733. It dropped to $1.0705, its weakest level since January 31. The dollar, however, slid to its lowest in more than two months against the yen, pressured by a drop in US Treasury yields, analysts said. The spread between US two-year and Japanese two-year debt yields contracted to around 139 basis points on Monday, the narrowest in about two weeks, a positive for the yen.
The dollar slipped 0.2 percent to 112.42 yen, and had earlier fallen to 112 yen, its weakest level since late November. "A break of 112.00 yen to the downside in dollar/yen...would signal a more significant correction of the dollar rally, indicating that the greenback is no longer a sure way bet to rise this year," said Boris Schlossberg, managing director of FX Strategy, at BK Asset Management in New York. The Australian dollar was the other biggest mover among the G10 currencies after weak retail sales numbers. It was last down 0.6 percent at US$0.7636.