(Updates prices, adds analyst comment)
* Euro struggles after Le Pen launches campaign
* Dollar down vs yen as U.S. yields fall
By Gertrude Chavez-Dreyfuss
NEW YORK, Feb 6 The euro slid 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
"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 hardly
Investors were largely focused on French politics, as
far-right National Front leader Marine Le Pen launched her
presidential bid, vowing to fight globalization and take France
out of the euro zone.
The yield spread between French and German 10-year yields,
as a result, rose to their highest since late 2012, "reflecting
the increasing risk that ... Le Pen poses to the European
political establishment," said Andres Bergero, director of
foreign exchange trading at Bank of the West in San Ramon,
Bergero added that Italian-German yield spreads have widened
as well, as election season in Europe gets underway, which could
indicate more volatility in the currency market.
Dutch elections are in March, French in April and German in
September. 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 late trading, the euro fell 0.4 percent against the
dollar to $1.0742. It dropped to $1.0705, its weakest
level since Jan. 31.
The dollar, however, slid to two-month lows against the yen
amid a drop in U.S. Treasury yields. The spread between U.S.
two-year and Japanese two-year debt yields contracted to around
136 basis points on Monday, the narrowest in two months, a
positive for the yen.
The dollar was last down 0.7 percent at 111.81 yen,
and had earlier fallen to 111.63, its lowest since late
Robust equity markets and the strength of U.S. economic
data, meanwhile, continue to back last year's bullish U.S.
dollar calls, analysts said.
But a lack of details on expected pro-dollar
tax-and-spending initiatives by President Donald Trump's new
administration and concerns over the White House's attitude on
the dollar and global trade have kept the currency under
pressure, for now.
Sireen Harajli, FX strategist at Mizuho in New York, said
she expects further dollar softness "until we see more concrete
progress on the budget, tax cuts and infrastructure spending"
from the U.S. government.
(Reporting by Gertrude Chavez-Dreyfuss; Editing by Bernadette
Baum and Will Dunham)