* Traders see Trump's G7 showdown as true to form, not a surprise
* Euro seen supported by Italy FM's comments before ECB meeting
* Hope of a U.S.-North Korea deal underpins dollar/yen
* Traders await hints from Fed on U.S. rate-hike path
By Richard Leong
NEW YORK, June 11 (Reuters) - The euro rose to a near two-week high on Monday after assurances from Italy that it would not leave the European Union calmed investors' nerves before the European Central Bank's policy meeting on Thursday.
Italy's economy minister Giovanni Tria said on Sunday his new coalition government would not leave the euro or issue securities to pay off companies owed money by the state, a plan investors viewed as a first step toward exiting the bloc. promise sent Italian borrowing costs down sharply on Monday as the euro inched up 0.1 percent to $1.1782 EUR= toward a two-week high of $1.1840 touched on Thursday, Reuters data showed. Italy comments calmed fears but let's wait for the government's policy actions this summer. That will decide the market's direction," said MUFG currency strategist Lee Hardman.
Investors are raising their bets that the ECB will signal at a policy meeting later this week a tapering down of its 2.55 trillion euro bond-buying program as early as September, following a flurry of hawkish comments by officials last week. euro bounced despite heightened worries about a global trade war following a spat at the Group of Seven summit in Canada between U.S. President Donald Trump and other leaders over automobile tariffs and other issues. lashed out at Canada and Europe over the U.S. trade deficit after he arrived in Singapore, where he is due to hold a critical meeting with North Korean leader Kim Jong Un in Singapore on Tuesday. Mexican peso and Canadian dollar slid on fears that Trump may scrap the North American Free Trade Agreement (NAFTA).
The Canadian dollar fell 0.5 percent to C$1.2993 CAD=D4 , while the Mexican peso MXN=D2 shed 1.1 percent at 20.522 peso per U.S. dollar.
Analysts said the fairly muted reaction in currencies reflected the low expectations markets had for the G7 summit, despite the fact that the euro is sensitive to the threat of U.S. tariffs on cars.
"Trade tensions are dominating in the aftermath of the G7 summit and headline risk is set to remain elevated in the absence of any significant domestic releases," ScotiaBank analysts wrote in a research note.
Before the ECB meeting, the U.S. Federal Reserve is almost unanimously expected to raise interest rates for the second time this year on Wednesday. The market's focus will be on the Fed's projection on the path of future interest rates.
Futures market implied traders expect the Fed to raise overnight borrowing at least one more time in 2018 after a possible rate increase on Wednesday, according to CME Group's (NASDAQ:CME) FedWatch program. FFZ8 FFF9
The dollar index .DXY was steady at 93.597, rising further from a three-week low set last Thursday. ========================================================
Currency bid prices at 1257 EDT (1657 GMT): Description
RIC
Last
U.S. Close Pct
YTD Pct High Bid Low Bid
Previous
Change Change
Session
Euro/Dollar
EUR=
$1.1786 $1.1766
+0.17 -1.75
+1.1820
+1.1754 Dollar/Yen
110.0200 109.5300
+0.45 -2.35
+110.0600 +109.2300 Euro/Yen
EURJPY= 129.69
128.90
+0.61 -4.06
+130.0500 +128.5300 Dollar/Swiss
CHF=
0.9854
0.9850
+0.04 +1.14
+0.9873
+0.9840 Sterling/Dollar GBP=
1.3379
1.3410
-0.23 -0.98
+1.3441
+1.3346 Dollar/Canadian CAD=
1.2990
1.2924
+0.51 +3.28
+1.3027
+1.2955 Australian/Doll AUD=
0.7611
0.7599
+0.16 -2.44
+0.7621
+0.7569 ar
Euro/Swiss
EURCHF= 1.1619
1.1590
+0.25 -0.60
+1.1657
+1.1593 Euro/Sterling
EURGBP= 0.8809
0.8774
+0.40 -0.83
+0.8831
+0.8775 NZ Dollar/Dolar NZD=
0.7028
0.7031
-0.04 -0.82
+0.7053
+0.7011 Dollar/Norway
8.0406
8.0537
-0.16 -2.03
+8.0754
+8.0229 Euro/Norway
EURNOK= 9.4812
9.4821
-0.01 -3.73
+9.5318
+9.4738 Dollar/Sweden
SEK=
8.6674
8.7066
-0.38 +5.68
+8.7294
+8.6453 Euro/Sweden
EURSEK= 10.2180 10.2573
-0.38 +3.85
+10.2780 +10.2056
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http://tmsnrt.rs/2egbfVh
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