Euro hits six-week peak on banking deal view; dollar falls

Europe’s common currency gained for a sixth straight day versus the greenback and is within sight of this year’s high of $1.3832.

The euro’s rise caused the dollar index to extend losses into a second straight day. It fell to six-week lows, dragged down by lower U.S. Treasury yields, as investors have pretty much removed the prospect of a reduction in the Fed’s asset purchases this month. The dollar index was down 0.3 percent at 79.91 .DXY

But the market’s focus has been on the euro and its resilience.

European Union finance ministers, meeting in Brussels, are likely to create a banking union with powers to close down failing euro zone banks. The issue is crucial as a banking union is widely viewed as shoring up the euro zone against future debt and financial crises.

“There’s some expectation that a deal may be reached before year-end, and that is supportive of the euro,” said Sireen Harajli, currency strategist at Mizuho Bank Ltd. in New York.

On the monetary policy side, a combination of the European Central Bank’s less-dovish tone and the failure to focus on negative interest rates at the last meeting has also underpinned the euro.

Leave a Reply

Your email address will not be published. Required fields are marked *