OPTIMISM HELPS EURO RALLY

THE EURO RALLIED and riskier currencies like the Australian dollar strengthened yesterday as optimism over a breakthrough in talks to end a US-China trade war encouraged investors. The euro has been stuck in a trading range against the dollar for several months as growing weakness in the euro zone economy offset dwindling expectations the Federal Reserve will raise US interest rates again this year. But after dropping to a three-month low on Friday, the euro has recovered, helped by improved investor sentiment as hopes rose for an end to the US-China trade conflict after both sides reported progress in talks. The dollar, the world’s most liquid currency, tends to perform well during bouts of investor nervousness. “Generally the mood is still quite positive on the outlook for trade,” said Adam Cole, a currencies analyst at RBC Capital Markets, adding that he thought the “risk-on” mood would continue. “If anything we would be running with it. You have a background of quite decent growth and a Fed that is putting rates on hold.” A better way to play the Fed’s pausing of rate increases was in dollar/yen, he said. | Reuters