LONDON (Reuters) – The euro rose to the highest in a week after positive economic data on Tuesday, while other currencies also rose after White House trade adviser Peter Navarro backed down in his comment that the trade deal United States with China had “finished”.
FILE PHOTO: Saudi riyal, yuan, Turkish lira, pound, US dollar, euro and Jordanian dinar notes are seen in this illustration taken on January 6, 2020. REUTERS / Dado Ruvic / Illustration
The euro was bolstered by French trade activity that recovered more than expected in June, returning to growth after three months of an unprecedented slowdown, as well as data showing that the eurozone slowdown eased again this month.
“The positive news… is that activity is beginning to pick up; The less positive news is that demand is lagging and remains subdued, ”said George Buckley, economist at Nomura.
“However, excluding the possibility of a second wave, demand should also pick up, even at a slower rate, as consumer and business confidence increases.”
The euro rose 0.6% to $ 1.1325, its highest level since June 16 EUR = EBS.
Navarro said Monday that the trade deal “continues in place” after his earlier comment fueling volatility in markets already agitated by the coronavirus pandemic.
He said his “excessive” comment had been taken “out of context,” while United States President Donald Trump said in a tweet that the agreement with China was “completely intact.”
The Australian dollar rose to a one-week high, having fallen earlier, and the Japanese yen was sure to drop to a six-day low as a result of Navarro’s pullback.
“We expect new limited consequences, and President Trump is expected to remain committed to the phase one trade deal in the run-up to the election,” said Lee Harman, currency analyst at MUFG.
“However, last night’s price action highlights that the currency market remains sensitive to uncertainty in trade policy. It remains a potential trigger for increased volatility. ”
The overnight volatility of the euro rose to almost 10%, the highest in nearly three weeks. EURONO = FN
“There was also a brief surge in demand in US dollars between 2 am and 3 am London time, which dragged the euro / dollar to a low of $ 1.1233, but the strength of the US dollar was short-lived,” he said. Hardman.
The sharp changes in currencies come as the market struggles between hopes of economic reopening in many parts of the world and signs that coronavirus infections are on the rise in the United States.
The Australian dollar rose 0.7% to 0.6950 AUD = D4, after rising to 0.6977, its highest level since June 16. Before that, it had fallen as much as 0.7%.
The offshore Chinese yuan reduced much of its previous losses to trade at 7.0559 per dollar on the CNH = EBS offshore market.
The Japanese refuge was the last neutral at 106.92 against the JPY = EBS dollar.
Elsewhere, Scandinavian currencies also rebounded, with the Norwegian krone rising more than 1% against the dollar and 0.7% against the euro.
Report by Olga Cotaga; Alison Williams and Pravin Char Edition
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