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FOREX-Dollar weak as Brexit deal boosts euro, sterling

Published 18/10/2019, 20:12
Updated 18/10/2019, 20:18
© Reuters.  FOREX-Dollar weak as Brexit deal boosts euro, sterling

© Reuters. FOREX-Dollar weak as Brexit deal boosts euro, sterling

* Dollar weaker against most majors

* Sterling higher ahead of parliament vote on Brexit deal

(Updates to U.S. afternoon)

By Saqib Iqbal Ahmed

NEW YORK, Oct 18 (Reuters) - The dollar fell sharply against

the euro on Friday as the common currency jumped on hopes that a

Brexit deal between Britain and the European Union could improve

the odds of the euro zone avoiding a recession for now.

In one of the most striking flourishes of the three-year

Brexit drama, British Prime Minister Boris Johnson confounded

his opponents on Thursday by clinching a new deal with the EU,

even though the bloc had promised it would never reopen a treaty

it agreed last year. The euro has been rattled this year by dismal manufacturing

data and by worries that deepening economic tensions between the

United States and China could slow euro zone economies even

further.

But with Britain's Johnson and EU leaders agreeing a new

deal for Britain to exit the bloc, and no recent bad news on

the U.S.-China trade front, the euro was getting a boost.

"While the results of tomorrow's vote is far from certain,

we see the progress made over the past week as diminishing the

chances of a no-deal Brexit," said John Doyle, vice president

for dealing and trading at Tempus Inc in Washington.

"A no-deal Brexit would be devastating for the U.K. economy,

but the ripple effects into the mainland would be substantial,"

Doyle said. "That has helped lift equity markets, regional

currencies and put downward pressure on the greenback."

The euro was up 0.32% at $1.1158, a near two-month high.

The respite for the euro comes as U.S. economic data have

grown increasingly gloomy, a development that could see the U.S.

Federal Reserve cut interest rates later this month, its third

rate cut this year.

Poor domestic data makes deeper cuts in U.S. interest rates

a touch more likely, Tempus' Doyle said.

The dollar index .DXY , which compares the dollar against

six major currencies, was down 0.31%. For the week, the index

was down 1%, its worst weekly performance in 17 weeks.

Money markets are pricing in an 82% chance of a rate cut at

the Oct. 30 meeting, Refinitiv data show.

The pound was 0.45% higher against the dollar at $1.2946 on

Friday, even as doubts remained about whether the proposed

Brexit deal will get through the British parliament in

Saturday's vote.

The yuan held steady against the dollar after data showed

China's economy grew at the slowest pace in more than 27 years

in the third quarter, owing to the trade war with the United

States and weak factory production. CNH=EBS

World FX rates in 2019 http://tmsnrt.rs/2egbfVh

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