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Euro up against dollar as Italian president reelected

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(Globalpost/GlobalPost)

The euro edged higher against the dollar Monday after Italy reelected its president in a move towards greater political stability.

Meanwhile, the yen strengthened marginally against major currencies, but remained fairly weak following its big stimulus push.

Near 2200 GMT, the euro was trading at $1.3062, up from $1.3049 late Friday.

The euro was trading at 129.77 yen, compared with 129.86 yen before the weekend.

The dollar was trading at 99.35 yen compared with 99.52.

Italian President Giorgio Napolitano Saturday was reelected after two months of political uncertainty. But the euro garnered only a modest bounce from the news, suggesting markets are girding for a possible European Central Bank rate cut or other stimulus, said Kathy Lien of BK Asset Management.

Lien cited a series of recent comments from European officials who hinted that additional interest rate cuts could be enacted. The outcome could rest on this week's eurozone purchasing managers index and a German business climate index, Lien said.

"European Central Bank officials are beginning to gather support around the idea of a rate cut or some form of additional easing from the central bank," Lien said.

Meanwhile, the Japanese yen strengthened modestly against other major currencies. That was a reversal from recent sessions that have seen the yen sell off sharply after the G20 effectively green-lighted the Bank of Japan's plan for aggressive stimulus.

Markets were gearing up for an interest rate decision by the Bank of Japan later this week.

The decision "may spur a sharp selloff in the Japanese yen as the central bank takes a more aggressive approach in achieving the 2 percent target for inflation," said David Song, currency analyst at DailyFX.

The British pound traded at $1.5285, up from Friday's level of $1.5226.

The dollar traded at 0.9344 Swiss francs, compared with 0.9337 francs.

jmb/pmh

http://www.globalpost.com/dispatch/news/afp/130422/euro-against-dollar-italian-president-reelected