Euro slides on Italy referendum vote

A ballot paper for the referendum on constitutional reform at a polling station on December 4, 2016 in Rome, Italy. Photo / Getty

The euro slid in Asia today after Italian Prime Minster Matteo Renzi stepped down after losing the constitutional referendum in a vote that could destabilise the country's shaky banking system.

The single currency dropped to $1.0577 in thin trade, after starting around $1.0645 earlier. The dollar was underpinned by expectations of a U.S. rate rise this month, and even held its ground on the safe-haven yen at 113.20.

Dealers said Italian bonds were set to come under pressure as top-rated U.S. Treasuries and German bunds gained. Asian investors are often reluctant to trade on European developments, preferring to wait for the continent's markets to open.

Investors and Europe's politicians feared victory for the opposition 'No' camp could cause political instability and renewed turmoil for Italy's banks, pushing the euro zone towards a fresh crisis.

Gold and other haven assets are gaining, with the yen and Australian bonds rising.

The Euro fell by 0.8 per cent following the polls, as Italian opposition parties said Prime Minister Matteo Renzi should resign immediately.

Sterling fell from an almost two-month high while the yen climbed for a third session.

"Renzi is going to go and with him the powerful lobbies who were also defeated," said Renato Brunetta, the parliamentary leader of former prime minister Silvio Berlusconi's centre-right Forza Italia party.