Euro at highest point since 2018 and sterling close to year’s peak

By StockHastix On Dec 30, 2020

</ifQrame></div><p></p> <div> <p>The euro climbed to its high of the year on Wednesday, taking its gains in 2020 close to 10 per cent. </p> <p>The European single currency rose as much as 0.5 per cent against the dollar to a peak of $1.2309, its highest level since 2018, extending a rally that has endured since the summer. It has since pulled back slightly to $1.2290.</p> <p>The gains have caused traders to speculate about whether the European Central Bank will seek to stem the inflation-sapping rally. The ECB does not target any particular exchange rate, but the euro’s value is an important point of reference. Olli Rehn, governor of the Finnish central bank, told Germany’s Börsen-Zeitung newspaper on Wednesday that the bank was “monitoring exchange rate developments very closely”.</p> <p>The euro rally is mostly the result of a drop in the dollar, which slipped a further 0.4 per cent on Wednesday and has lost about 7 per cent against a basket of other major currencies in 2020.</p> <p>The weakness of the dollar “will continue a bit” as the global economy recovers and the Federal Reserve not only keeps US interest rates low but does not “even thinking about raising them”, said James Ragan, director of wealth management research at DA Davidson. “In the short run, the weakness can benefit US markets,” he added. </p> <p>Meanwhile, the British pound came close to breaking its high of the year, gaining 0.8 per cent against the dollar to $1.3614 as MPs in London approved the post-Brexit trade deal with the EU that was finalised on Christmas Eve. </p> <p>The strong pound weighed on London’s multinational and export-oriented FTSE 100, which closed down 0.7 per cent after gaining 1.6 per cent in the previous session. </p> <p>Meanwhile, the UK government confirmed on Wednesday morning that the country’s medicines regulator had approved the Covid-19 vaccine made by Oxford university and AstraZeneca. The news came shortly after a British woman became the first person to receive the second dose of the vaccine made by BioNTech and Pfizer.</p> <p>US equities moved higher over hopes vaccinations will propel an economic recovery in 2021. The benchmark S&P 500 index of blue-chip US stocks rose 0.2 per cent in New York. The Nasdaq Composite gained 0.3 per cent.</p> <p>The yield on 10-year Treasuries, which moves inversely to price, edged lower to 0.93 per cent, after advancing earlier in the session.</p> <p>MSCI’s gauge of Asia-Pacific shares, excluding Japan, rose 1.8 per cent, building on record-breaking gains since November to reach an all-time high. China’s CSI 300 index of Shanghai and Shenzhen-listed shares rose more than 1 per cent to its highest point since 2015 as the EU and China prepared to announce an investment treaty. Hong Kong’s Hang Seng climbed 2.2 per cent and South Korea’s Kospi gained 1.9 per cent.</p> <div class="n-content-video n-content-video--internal p402_hide"> <div class="n-content-video__placeholder" data-o-component="o-video" data-o-video-id="38d64727-7683-45c4-bcb2-73459a643d0c"><span>Video: Will tech stocks end their bull run in 2021? | Charts that Count</span></div></div> <p><em>Additional reporting by Neil Hume </em></p> </p><div class="stock-160" style="text-align: center; " id="stock-1970467130"><iframe src="https://cdn.plus500.com/Media/Buttons/Responsive/57113/index.html?set=Buy_Sell_Buttons&language=EN&country=GB&url=https%3A%2F%2Fwww.plus500.co.uk%2F%3Fid%3D128619%26pl%3D2&isRW=1" width="160" height="70" scrolling="no" frameborder="0" style="border:none">

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