01.06.201802:08:00UTC+00U.S. Tariffs Weigh Down Canadian Dollar, Peso; Euro Climbs on Easing Tensions

The euro seemed to be on course to post its first weekly increase in seven weeks as concerns over Italy's political crisis ebbed, but the Canadian dollar and Mexican peso were hit by Washington's announcement that it will push through with heavy tariffs on imported steel and aluminum.

The euro was little changed at $1.1692 on the day but keeping its rebound from Tuesday's 10-month trough of $1.1510 intact. So far this week, the euro is up 0.4 percent after six consecutive weeks of declines, hit by indications of a slowdown in eurozone economic growth and political upheavals in Italy and Spain.

However, Italy's borrowing costs sharply declined for the last two days as the nation's efforts to establish a coalition government is now set to proceed as planned. The two anti-establishment reached an agreement on their pick for the key economy ministry after their initial eurosceptic choice, Paolo Savona, was rejected by President Sergio Mattarella.

In Spain, a political chaos seems to be avoided as Pedro Sanchez was almost certain to become Spain's new Prime Minister after his socialist party gathered enough votes to oust Mariano Rajoy in a confidence vote scheduled on Friday over a corruption case.

While worries about European politics ebb, worries of a trade war between developed countries return after the U.S. announced it will press on with tariffs on aluminum and steel imports from Canada, Mexico and the European Union. Canada and Mexico retailated swiftly to the move, announcing their own tariffs on U.S. goods while the EU also laid out its own reprisals.

The Canadian dollar stood at C$1.2950 against the greenback after declining 0.65 percent the previous day.The Mexican peso plunged to a 15-month low of 20.050 to the dollar on Thursday and last traded at 19.908 per dollar.

The dollar rose 0.2 percent to 109.02 yen, helped by a rally in U.S. bond yields following easing concerns on Italian politics.