FOREX-Euro jumps to near 2-month highs on Brexit deal

October 17, 2019

LONDON (Oct 17) - The euro rallied to its highest levels in nearly two months against the dollar on Thursday after the European Union and Britain struck a Brexit deal.

Though the deal remains to be ratified by British lawmakers, traders briefly sent the British pound and the euro up by more than one percent and 0.5 percent respectively.

The euro has struggled, falling more than 3% so far this year, as a broader economic slowdown in Europe fuelled by the protracted trade war between Washington and China has hurt investor sentiment towards the single currency.

But hopes of a Brexit deal this week has dragged the euro out of a downtrend and pushed it above $1.11 for the first time in a month. Britain clinched a Brexit deal with the European Union on Thursday, European Commission President Jean-Claude Juncker said, just a few hours before the start of a summit of the bloc's leaders in Brussels.

"A move above $1.1210.. and the 200-day moving average is needed to boost confidence that a low is in place," said Marc Chandler, chief market strategist at Bannockburn Global Forex.

On Thursday, the single currency briefly gained 0.5% to $1.1140 before trimming some gains to stand 0.4% up at $1.1112. The euro's surge washed over into currencies that extended gains against the struggling dollar.

Sterling surged more than 1% and British share prices rallied on Thursday on the Brexit deal news. Against a basket of its rivals , the greenback fell 0.4% to 97.496, its lowest since late-August. The dollar also suffered in early London trading due to weak U.S. data.

U.S. retail sales fell for the first time in seven months in September while a report from the U.S. Federal Reserve described the economy's progress in cautious terms.

Elsewhere, the Norwegian crown weakened to an all-time low of 10.1800 against the euro . Some analysts blamed the crown's recent weakness on global trade jitters, while others said the speed and magnitude of the drop were hard to explain.

The Australian dollar held near the day's highs, up 0.3% against the dollar after jobs data showed buoyant hiring, lowering chances of monetary easing in November.


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