Early trade in New York: Euro approaches 2-year high; Aussie, Kiwi up

NEW YORK: The euro rose to its highest in nearly two years against the dollar, while commodity currencies gained, continuing the risk-on moves that have dominated since European Union leaders agreed on a fiscal stimulus plan on Tuesday.

Currency traders largely shrugged off US-China tensions.

Risk appetite in currency markets, however, diminished for around two hours, after China's foreign ministry said the United States had told China on July 21 to close its consulate in Houston.

The move marked a further deterioration in US-China relations, which have become more fraught since the outbreak of Covid-19.

"I think the US-China tension is being ignored," said Mazen Issa, senior currency strategist, at TD Securities in New York.

In midmorning trading, the euro was last up 0.5% at $1.1580, after hitting $1.1601, the highest in more than 1-1/2 years.

After gaining on the US-China headlines, the dollar index resumed falling and was down 0.2% at 94.939. The index fell to a low of 94.827, its weakest since October 2018.

The Australian dollar was up 0.2% at US$0.7141 after earlier hitting a fresh 15-month high, while the New Zealand dollar was up 0.3% at US$0.6662, touching a six-month peak earlier in the session.

The Chinese offshore yuan, which weakened past 7 per dollar on US-China headlines, was slower to recover, at 6.9954.

Meanwhile, sterling fell versus the dollar and euro.