July 21, 2020 / 4:59 PM / 19 days ago

FOREX-Euro hits 1-1/2 year high vs dollar after EU virus deal

    * EU deal cheered, although largely priced in
    * Analysts say dollar set to struggle for now
    * Commodity currencies soar as risk sentiment improves
    * Graphic: World FX rates in 2020 tmsnrt.rs/2RBWI5E

 (Adds new comment, updates prices)
    By Gertrude Chavez-Dreyfuss
    NEW YORK, July 21 (Reuters) - The euro on Tuesday climbed to its highest against the U.S. dollar since
January last year, after European Union countries struck an agreement on a massive stimulus plan to revive
their coronavirus-battered economies.
    An upturn in sentiment following the EU deal lifted commodity currencies, which tend to benefit in
times of increased risk appetite. The Australian dollar rose to a 15-month high against the greenback, the
New Zealand currency climbed to a six-month peak, and the Canadian dollar advanced to its strongest level
in six weeks. 
    The EU deal - a compromise on concerns that thrifty northern states had about handouts for more their
more profligate neighbors - was hailed as an important signal of unity by Europe's leaders and a
foundation for economic recovery.
    "There was all this anticipation for this rescue package, which was almost guaranteed that it will
pass and when it did, it made everybody happy," said Juan Perez, currency trader at Tempus Inc in
Washington.
    "And this kind of symbolizes the fact that the European Union is going to work together to achieve
fiscal integration for this rescue package. And it came to fruition," he added.
    Encouraging results from several COVID-19 vaccine trials also boosted market sentiment and drove a
rally in global stock markets.
    In midday trading, the euro rose 0.6% to $1.1510, after earlier hitting $1.1516,, the
highest level since Jan. 11, 2019 last year.
    "I think with sentiment having swung to the euro's favor, that leaves the dollar vulnerable to selling
on rallies, and the euro a buy on dips," said Joe Manimbo, senior market analyst, at Western Union
Business Solutions in Washington.
    "Above $1.15, that certainly could pave the way for $1.17 over the coming months," he added.
    Against basket of major currencies, the dollar fell 0.5% was to 95.25, the lowest since early
March.
    ING analysts said they are looking for "more gains to $1.20 later this year" as dollar weakness kicks
in because the recovery fund agreement is significant enough "not to prompt investors to exit their long
euro positions," particularly against the dollar, where the outlook has darkened for the rest of the year.
    The Australian dollar was last up 1.4% at US$0.7113, also lifted after the central bank offered few
surprises in minutes from last month's meeting.
    In a speech, Governor Philip Lowe said while he would prefer a cheaper Aussie dollar, its 27% recovery
from March lows was supported by fundamentals.
    The New Zealand dollar rose 0.8% to US$0.6626.
    The Canadian dollar strengthened 0.7% to C$1.3443 per U.S. dollar.
    The dollar fell 0.5% versus the yen to 107.77 yen.
    
    ========================================================
    Currency bid prices at 12:43PM (1643 GMT)
 Description      RIC         Last           U.S. Close  Pct Change     YTD Pct     High Bid    Low Bid
                                              Previous                   Change                 
                                              Session                                           
 Euro/Dollar      EUR=        $1.1508        $1.1444     +0.56%         +2.66%      +1.1516     +1.1424
 Dollar/Yen       JPY=        106.7500       107.2400    -0.46%         -1.93%      +107.3600   +106.7700
 Euro/Yen         EURJPY=     122.88         122.78      +0.08%         +0.76%      +123.0200   +122.4800
 Dollar/Swiss     CHF=        0.9331         0.9387      -0.60%         -3.59%      +0.9399     +0.9332
 Sterling/Dollar  GBP=        1.2740         1.2660      +0.63%         -3.91%      +1.2752     +1.2651
 Dollar/Canadian  CAD=        1.3436         1.3533      -0.72%         +3.47%      +1.3537     +1.3433
 Australian/Doll  AUD=        0.7112         0.7013      +1.41%         +1.30%      +0.7119     +0.7011
 ar                                                                                             
 Euro/Swiss       EURCHF=     1.0742         1.0745      -0.03%         -1.01%      +1.0758     +1.0723
 Euro/Sterling    EURGBP=     0.9031         0.9035      -0.04%         +6.83%      +0.9050     +0.9002
 NZ               NZD=        0.6628         0.6574      +0.82%         -1.59%      +0.6636     +0.6560
 Dollar/Dollar                                                                                  
 Dollar/Norway    NOK=        9.1194         9.2276      -1.17%         +3.88%      +9.2325     +9.1143
 Euro/Norway      EURNOK=     10.4964        10.5664     -0.66%         +6.69%      +10.5796    +10.4658
 Dollar/Sweden    SEK=        8.8888         8.9506      -0.35%         -4.91%      +8.9808     +8.8846
 Euro/Sweden      EURSEK=     10.2330        10.2692     -0.35%         -2.26%      +10.2813    +10.2170
 
    
 (Reporting by Gertrude Chavez-Dreyfuss; Editing by Steve Orlofsky and Alistair Bell)
  
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