Euro hits one-month low after worst day of 2017

LONDON: The euro slipped to a one-month low on Tuesday after its worst day so far this year, as investors worried that months of coalition talks in Germany could weigh on the economy and would make closer euro zone integration difficult.

German Chancellor Angela Merkel, who won a fourth term in elections on Sunday but now faces a tough juggling act to form a government with other parties, on Monday struck a note of caution with respect to French calls for fiscal union.

French President Emmanuel Macron, who wants a fundamental overhaul of the European Union's single currency zone and whose ideas include creating a euro zone budget and a euro zone finance minister, will lay out his plans in a speech in Paris on Tuesday.

But the results of Germany's election have forced Merkel to consider a new coalition including the liberal Free Democrats (FDP), a party critical of Macron's ideas on Europe, and investors are therefore worried the reforms that they would welcome will not end up going through.

The euro slipped as low as $1.1811 in morning trade in London, its weakest since Aug. 25, after falling around 0.9 per cent on Monday - its heaviest one-day loss since December.

Commerzbank currency strategist Thu Lan Nguyen, in Frankfurt, said hopes for greater euro zone integration had been the main cause of a more than 10 per cent appreciation by the euro against the dollar since the first round of France's presidential election.