November 26, 2018 / 3:13 PM / 8 months ago

FOREX-Euro gains on reports that Italy may lower deficit goal

    * Euro gains on reports that Italy may reduce deficit target
    * Sterling boosted by Brexit deal with EU
    * Fed in focus before Powell speech, meeting minutes

 (New throughout, updates prices, market activity and comments
to U.S. market open, new byline, changes dateline, previous
    By Karen Brettell
    NEW YORK, Nov 26 (Reuters) - The euro gained against the
dollar on Monday on signs that Italy may cut its budget deficit
target to satisfy the European Union, and as a rebound in oil
prices helped to improve risk sentiment.
    Italy's governing coalition may reduce next year's budget
deficit target to as low as 2 percent of gross domestic product
to avoid disciplinary action from Brussels, two government
sources said on Monday.
    Sterling also rose after the European Union sealed a Brexit
deal but the currency's gains were curbed by doubts about Prime
Minister Theresa May's ability to get the agreement through a
divided British parliament.
    “We’re seeing some constructive headlines from across the
Atlantic, which is buoying risk sentiment, so that’s broadly
undercutting the U.S. dollar,” said Joe Manimbo, senior market
analyst at Western Union Business Solutions in Washington.
    The euro gained despite data showing that German business
morale fell by more than expected in November as the country's
exporters get caught up in a trade dispute between China and the
United States.
    The euro was last up 0.15 percent to $1.1357.
    Broader optimism over the euro was also reflected in the
latest weekly positioning data, where long dollar positions have
been declining slightly for the week ending Nov. 16. Net weekly
positions in the euro rose by their biggest weekly margin in
more than two months for that week.
    Investors are focused this week on a speech on Wednesday by
Federal Reserve Chairman Jerome Powell and minutes from the
Fed’s Nov. 7-8 meeting on Thursday, for further indications of
how many more times the U.S. central bank is likely to hike
    Slowing global growth has raised expectations the Fed may
halt its tightening cycle sooner than previously expected.
    “It seems like there are tentative signs from the Fed that
they see caution on the rise, so if the Fed minutes and Mr
Powell both play up an increase in caution I think that would
tend to suggest the Fed may opt for a slower pace of rate hikes
going forward,” said Manimbo.
    Trade tensions between the U.S. and China are also at the
forefront with U.S. President Donald Trump and Chinese President
Xi Jinping due to meet at a G20 meeting in Buenos Aires on Nov.
30 to discuss contentious trade matters.
    Currency bid prices at 9:40AM (1440 GMT)
 Description      RIC         Last           U.S. Close  Pct Change     YTD Pct     High Bid    Low Bid
                                              Previous                   Change                 
 Euro/Dollar      EUR=        $1.1357        $1.1340     +0.15%         -5.33%      +1.1383     +1.1327
 Dollar/Yen       JPY=        113.3900       112.9400    +0.40%         +0.64%      +113.4300   +112.8800
 Euro/Yen         EURJPY=     128.78         128.02      +0.59%         -4.73%      +128.9000   +127.9400
 Dollar/Swiss     CHF=        0.9982         0.9965      +0.17%         +2.45%      +0.9984     +0.9955
 Sterling/Dollar  GBP=        1.2842         1.2812      +0.23%         -4.96%      +1.2863     +1.2797
 Dollar/Canadian  CAD=        1.3212         1.3234      -0.17%         +5.05%      +1.3237     +1.3188
 Australian/Doll  AUD=        0.7246         0.7234      +0.17%         -7.11%      +0.7276     +0.7225
 Euro/Swiss       EURCHF=     1.1338         1.1309      +0.26%         -3.00%      +1.1341     +1.1303
 Euro/Sterling    EURGBP=     0.8843         0.8846      -0.03%         -0.45%      +0.8869     +0.8838
 NZ               NZD=        0.6798         0.6779      +0.28%         -4.08%      +0.6815     +0.6756
 Dollar/Norway    NOK=        8.5636         8.5938      -0.35%         +4.35%      +8.6016     +8.5419
 Euro/Norway      EURNOK=     9.7266         9.7464      -0.20%         -1.24%      +9.7482     +9.7163
 Dollar/Sweden    SEK=        9.0704         9.0914      +0.03%         +10.59%     +9.0991     +9.0341
 Euro/Sweden      EURSEK=     10.3035        10.3009     +0.03%         +4.72%      +10.3121    +10.2740

 (Additional reporting by Dhara Ranasinghe in London
Editing by Chizu Nomiyama)
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