Euro rises to highest in more than two years

London

STRONG eurozone survey figures and hopes of progress on Brexit negotiations pushed the euro above US$1.22 against the US dollar on Wednesday for the first time since April 2018.

The euro has risen nearly 13 per cent since the European Union (EU) announced a recovery fund in May. Stronger economic activity data in recent months have also boosted bets that Europe is likely to outperform the United States in the coming months.

Those expectations got a further boost with manufacturing survey data from Germany and France indicating that Europe's biggest economies may be recovering quickly.

Against the US dollar, the euro rose 0.4 per cent to US$1.22065, putting it on track for its biggest annual rise since 2017.

"European Purchasing Managers' Indexes (PMIs), Brexit and a likely dovish Fed are boosting risk appetite in the currency markets," said Kenneth Broux, a strategist at Societe Generale in London.

Ursula von der Leyen, the president of the European Commission, said she could not say whether the EU and Britain would reach a trade agreement, but progress had been made and the next few days would be critical.

Investors are also keeping an eye on the outcome of a two-day Federal Reserve policy meeting beginning on Wednesday.

Policymakers are expected to keep the US overnight interest rate near zero and signal it will stay there for years to come - a decision that analysts say will further boost risk sentiment.

"There's a feel-good momentum in the market," said Bart Wakabayashi, Tokyo branch manager of State Street Bank in Tokyo.

The US dollar index, which measures the greenback against a basket of currencies, was last at 90.127, a level not seen since April 2018.

Elsewhere, comments by Swedish central bank deputy governor Jansson that a rapid and significant strengthening of the Swedish krona would lead to problems for the central bank in reaching its inflation target failed to stop the krona's march to 32-month highs.

The Australian dollar was little changed at 75.75 US cents. It neared a high 2½-year high when it reached 75.780 on Monday. REUTERS