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Euro firms on trade optimism, sterling higher after Brexit vote

ForexApr 03, 2019 09:10PM ET
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© Reuters. FILE PHOTO: Dollar, Euro and Pound banknotes are seen in this picture illustration

By Tomo Uetake

TOKYO (Reuters) - The euro held firm against the dollar on Thursday as hopes of a trade deal between the United States and China bolstered risk appetite globally, while the British pound was buoyed after the UK parliament approved legislation to seek a Brexit delay.

The euro was last up 0.1 percent against the U.S. dollar at $1.1246. The single currency had fallen to its lowest levels in more than three weeks on Tuesday and neared $1.1177, which, if broken, would send the currency to its weakest level since June 2017.

The safe-haven yen touched a two-week low of 111.575 yen to the dollar late on Wednesday. The pair last quoted at 111.425 yen.

Trade talks between the United States and China made "good headway" last week in Beijing and the two sides aim to bridge differences during talks that could extend beyond three days this week, White House economic adviser Larry Kudlow said.

He said China had recognized problems for the first time during the talks that the United States has raised for years, referring to intellectual property theft, forced transfer of technology from U.S. companies doing business in China and others.

Sterling gained on Wednesday as Prime Minister Theresa May sought a Brexit compromise with opposition leader Jeremy Corbyn in a last-ditch effort to end a national crisis.

The lower house of the British parliament on Wednesday approved legislation which would force May to seek a Brexit delay to prevent a potentially disorderly departure on April 12 without a deal.

The pound last stood at $1.3180, up 0.2 percent on the day.

"On the whole, there is a risk-on mood in the market. Upticks in Chinese data and headlines on progress in U.S.-China trade talks are behind this sentiment," said Kyosuke Suzuki, director of forex at Societe Generale (PA:SOGN).

"But the market has already priced in expectations that Washington and Beijing will soon reach a deal, so it's questionable how much further currencies can move."

U.S. economic data published on Wednesday fell short of market expectations, hindering the U.S. dollar.

Services sector activity hit a more than 19-month low in March and private payrolls grew less than expected, underscoring a loss of momentum in the economy that supports the Federal Reserve's move to suspend interest rate hikes this year.

The reports on Wednesday came on the heels of some modestly upbeat data earlier in the week, including retail and motor vehicle sales and manufacturing. Investors are worried about a sharp slowdown in economic growth in the first quarter.

Euro firms on trade optimism, sterling higher after Brexit vote
 

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