Early trade in New York: Euro climbs to more than 4-month peak

NEW YORK: The euro climbed to its highest in more than four months against the US dollar on Monday on hopes that the European Union would agree on a recovery fund for economies in the region hit by the Covid-19 pandemic.

The fund is expected to be around 750 billion euros ($857.93 billion), of which 390 billion euros could be offered as grants. European Union leaders said they were cautiously optimistic that agreement on a massive stimulus plan for their coronavirus-blighted economies was within reach, though tensions among them remained high after days of squabbling.

"We can't help but notice how bullish the street is when it comes to euro/dollar forecasts, and so we have to wonder if the eventual confirmed deal headlines prompt a 'buy the rumor/sell the fact' type of market reaction," said Erik Bregar, head of FX strategy at Exchange Bank of Canada in Toronto.

In midday trading, the euro was last up 0.1% at $1.1442, after earlier hitting a more than four-month high of $1.1467. The US dollar index fell 0.1% to 95.863 after sliding to a six-week low hit earlier in the session. Its gains, though, remain capped by expectations of more stimulus from Europe and from the United States.

The dollar rose 0.2% versus the yen to 107.25 and was up 0.1% against the Swiss franc to 0.9396 franc. The Australian and New Zealand dollars, however, gained against the greenback to US$0.7004 and US$0.6562.