After almost one hundred hours of tense negotiations a landmark EU agreement for a massive stimulus plan to boost their coronavirus-hit economies was reached.
Summit chairman tweeted “Deal” shortly after the 27 leaders finally reached agreement at a 5.15 a.m. (0315 GMT) plenary session.
The EU deal includes 390 billion euros of grants, down from an initially proposed 500 billion, along with 360 billion of low-interest loans.
The deal will breathe life into the EU economies by reforms to help businesses rebound from the pandemic. The plan provides new measures to reshape economies in the long term and create investments to help protect from “future crises.”
The hard-won deal also will allocate hundreds of billions of euros in grants and loans to member states. The agreement is more of a compromise on concerns that thrifty northern states had about handouts for the south.
EU leaders characterised the deal as an important signal of unity by Europe’s leaders and a foundation for recovery. The French President Macron and Belgian Prime Minister Wilmes have praised the European body and expressed hope for the future.
Officials said the deal is critical to dispel doubts about the bloc’s very future.
Aside from the EU recovery fund agreement, early data from trials of three potential COVID-19 vaccines, has been promising.
Investors will now focus on possible further U.S. measures after the $3 trillion injected earlier this year. GOP leaders and the Trump administration are split on what to focus on in the next economic recovery package.
START TRADINGForex – Landmark EU agreement on stimulus plan
Also supporting broader sentiment, as well as commodity-linked currencies, were encouraging results from several COVID-19 vaccine trials. Commodity-linked currencies rose. Currency markets were generally quiet elsewhere, with most currencies trading in tight ranges.
The dollar was flat when measured against a basket of currencies, and last at 95.813.
The yen was flat versus the dollar at 107.31.
The Australian dollar gained 0.5% to $0.7049, its strongest since June 10. The central bank offered few surprises in minutes from last month’s meeting or a speech from Governor Philip Lowe.
The landmark EU agreement sent the euro 0.2% higher to $1.1470, its strongest since March 9. However, the gains were tempered by prior market expectations that the deal would eventually get agreed. The single currency was last down 0.1% at $1.1442.
The pound also benefited from the broad improvement in risk sentiment. The British sterling added as much as 0.4% to $1.2716, its highest since June 11. It rose 0.3% against the euro to 90.16 pence.
The pound rallied above $1.27 for the first time in six weeks on Tuesday. Optimism over a coronavirus vaccine and the landmark EU agreement enabled it to extend the previous day’s rally.
Commodity markets also gained. Brent crude oil was up 31 cents at $43.59. U.S. crude (WTI) gained 19 cents to $41.00, though both were within July’s tight $2-$3 trading range.
Gold rose to a nine-year high as expectations of higher inflation from increased stimulus overshadowed the resultant gain in risk appetite.
Spot gold was up 0.6% at $1,825 per ounce by 0800 GMT, after hitting its highest since September 2011.
PLEASE NOTE The information above is not investment advice.
Sources: Reuters, Investing, CNN money