The euro edged higher to a two-week high on Monday as risk appetite picked up thanks to firmer oil prices.
Further, news that Italy may cut its budget deficit target to placate the European Union lift the single currency. Italy may reduce next year’s budget deficit target to as low as 2% of gross domestic product. According to Italian government officials this is a move to avoid a disciplinary procedure from Brussels.
This and news that a Brexit deal was reached by Britain-EU helped euro to overcome disappointing German business sentiment data.
Europe’s single currency gained almost a third of a percent to $1.1368. The euro was up 0.5% at 128.65 yen. It hit a two-week high of $1.1472 last week. European stock markets rallied over 1%.
With European leaders finally endorsing May’s plan, sterling traders are focused on a parliamentary vote on the deal. Brexit negotiations and political uncertainty in Britain remain the key drivers for the pound.
Forex – Commodities – Firmer oil prices boosted €; Pound up on EU-Brexit deal
Currency markets showed little immediate reaction to news that the German Ifo business climate index dipped in November.
Sterling rose on Monday after the EU sealed a Brexit deal. However, the british currency’s gains were curbed by doubts about UK Prime Minister getting the agreement through a divided parliament.
The pound traded up 0.3 percent versus the dollar at $1.2852 at 1130 GMT and traded flat against a resurgent euro at 88.43 pence.
As risk assets rallied, U.S. stock futures were up more than 0.1%, while the dollar index dipped 0.2% to 96.73.
At a G20 meeting on Nov. 30, U.S. and Chinese Presidents are to discuss contentious trade matters. This would impact currencies such as the Australian and New Zealand dollars due to close trading ties with China.
In another sign of improved risk appetite, the Japanese yen changed hands at 113.18, down by 0.20% against the greenback. The Australian dollar was half a percent firmer at $0.7261 and away from last week’s low at $0.7202.
Firmer oil prices rose above $60 a barrel on Monday. Oil recovered some of the previous session’s near-7% fall, although uncertainty over global economic growth limited the gains.
Brent crude futures were up $1.30 at $60.10 a barrel by 1255 GMT. U.S. futures were up 77 cents at $51.19 a barrel after Friday’s sell-off which saw both contracts hit 13-month lows.
Oil production has surged this year. The International Energy Agency expects non-OPEC output to rise by 2.3 million barrels per day (bpd) this year. Meanwhile, experts expect oil demand next year to grow by 1.3 million bpd.
Sources: Reuters, CNN money, BBC
PLEASE NOTE The information above is not investment advice.