The euro on Tuesday scaled to its highest against the U.S. dollar since January 2019, after European Union countries reached an accord on a massive stimulus plan to revive their economies that have been mired in a coronvirus-induced slump.
Sentiment rose on the heels of the EU deal and lifted commodity currencies, which tend to benefit in times of increased risk appetite. The Australian dollar rose to a 15-month high against the greenback, the New Zealand currency touched a six-month peak, and the Canadian dollar advanced to its strongest level in six weeks.
In afternoon trading, the euro rose 0.69% to $1.15275, after earlier hitting $1.154, EUR=EBS, the highest level since Jan. 11, 2019.
Against a basket of major currencies, the dollar fell 0.64% to 95.123 =USD, the lowest since early March.
ING analysts said they are looking for “more gains to $1.20 later this year” as dollar weakness kicks in because the recovery fund agreement is significant enough “not to prompt investors to exit their long euro positions,” particularly against the dollar, where the outlook has darkened for the rest of the year.
The Australian dollar AUD=D3 was last up 1.83% at US$0.7146, also lifted after the central bank offered few surprises in minutes from last month's meeting.
In a speech, Governor Philip Lowe said while he would prefer a cheaper Aussie dollar, its 27% recovery from March lows was supported by fundamentals.
The dollar fell 0.45% versus the yen to 106.78 yen JPY=EBS.
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