Investing.com - The Australian dollar gained in early trade in Asia on Monday with geopolitical risk in focus, but scant data ahead on the day, while the yen weakened slightly in holiday-thinned trade.
AUD/USD traded at 0.9397, up 0.05%, and USD/JPY taded at 101.35, up 0.02%.
Overnight, the euro touched five month lows against the dollar and the yen as the single currency was hit by ongoing concerns over the outlook for the recovery in the euro area, while heightened geopolitical concerns underpinned safe haven demand.
The euro came under pressure after the Bank of Italy cut its growth forecast for this year to 0.2% from 0.7% and warned that risks to the economy remained to the downside. The announcement underlined concerns over the faltering economic recovery in the currency bloc.
Earlier in the week European Central Bank President Mario Draghi said that large scale asset purchases are “squarely” within the bank’s mandate. The remarks were the latest indication that the central bank is open to further monetary easing measures to stave off the risk of deflation in the euro area.
Meanwhile, investor demand for safe haven assets was boosted following the shooting down of a Malaysia Airlines jet in eastern Ukraine. Moscow has denied involvement in the crash, which came a day after the U.S. announced a fresh round of sanctions against Russia for supporting separatists in east Ukraine.
Markets were also unsettled as Israel expanded its ground offensive in Gaza.
Demand for the dollar continued to be underpinned after Federal Reserve Chair Janet Yellen indicated earlier in the week that interest rates may rise sooner if the economy continues to improve.
The US Dollar Index, which tracks the performance of the greenback versus a basket of six other major currencies, was at 80.58, down 0.02%.
In the week ahead, the U.S. is to release what will be closely watched data on consumer prices, home sales and manufacturing orders. Investors will also be awaiting surveys on private sector activity in the euro zone, data on second quarter growth from the U.K. and a rate statement by New Zealand’s central bank.
On Monday, markets in Japan are to remain closed for a national holiday. In the euro zone, Germany’s Bundesbank is to publish its monthly report.