Euro climbs to 3-week high as US dollar weakens

London

THE euro rose above US$1.24 to a three-week high on Tuesday after solid Chinese economic data and receding worries about more US strikes in Syria revived risk sentiment, although a monthly survey of German investor sentiment undercut the optimism.

With peripheral bond yields falling to multi-week highs, investors resumed buying the euro, nearly pulling it out of a narrow trading range in which it has been trapped for weeks .

Holding above US$1.24 should encourage euro bulls again after a rally earlier this year faltered.

US President Donald Trump's comments about China and Russia trying to devalue their currencies this week also weighed on the dollar, with investors believing that the US administration wants to see a weaker currency.

That helped the euro rally 0.3 per cent to US$1.2412, its highest since March 28, before it retreated after a monthly survey showed morale among German investors was deteriorating .

"There's been a general weakness in the dollar and risk sentiment seems to be reviving somewhat. That is supporting the euro but also sterling and Asian currencies," said Alvin Tan, FX Strategist at Societe Generale."

While the dollar was flat against a basket of major currencies, it held near a two-week low tested earlier in the Asian session.

Several Asian currencies, including the Korean Won, rose on hopes that US-China trade conflict would calm down.

Elsewhere, the Swiss franc fell to its lowest versus the euro since the Swiss National Bank scrapped its currency peg in January 2015. Sterling reached a new post-Brexit referendum high .

The franc, which analysts expect to fall further as the Swiss central bank sticks to its loose monetary policy even as rivals tighten, slipped 0.2 per cent on the day to 1.1905.

Against the yen, the dollar fell to 107.06 yen, off the seven-week high of 107.78 yen it touched on Friday, before a meeting between Mr Trump and Japanese Prime Minister Shinzo Abe on Tuesday and Wednesday.

Tokyo is eager to avoid being pushed into talks on a two-way free-trade agreement aimed not only at market access but at monetary and currency policies.Traders suspect Washington will put pressure on Japan after the US Treasury's semi-annual currency report on Friday kept Japan on a monitoring list for possible manipulation. REUTERS