Euro crushes yen, sterling as Brexit, US stimulus boost up risk appetite

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Euro crushes yen, sterling as Brexit, US stimulus boost up risk appetite

On Monday, a slew of major and emerging market currencies had beaten a hasty retreat against the bloc’s common currency euro, as risk-appetites rose sharply over the narratives of a Brexit trade deal agreed in the Christmas eve, while an incumbent US President Donald Trump’s delayed decision to sign off a $2.3 trillion fiscal package added to investors’ optimism further.

In point of fact, euro’s robust gain in the day against a number of currency majors including safe-haven Japanese Yen alongside Great Britain Pound, was almost entirely galvanized by a narrow Brexit deal agreed on Thursday evening which in effect had prevailed a perilous departure of Britain from EU.

On top of that, market participants’ sentiments were feathered further after the US President Donald Trump had signed off a $2.3 trillion fiscal package late on Sunday which included a $892 billion in pandemic stimulus following intense pressure from bipartisan lawmakers, while Trump’s approval of the fiscal package had restored an extended unemployment benefit for more than 1.4 million Americans and averted an imminent government shutdown.

Nonetheless, the US Dollar Index (DXY) measured against a basket of six major currencies on an average remained largely unresponsive amid frets that the $892 billion in pandemic stimulus bill might not be sufficient in a longer-term outlook to heave up a pandemic-ravaged US economy which had entered into a recession in February this year and wrapped up the day 0.01 per cent lower to 90.19.

Euro rally gathers steam as Brexit risk averted

Citing statistics, in the day’s FX market closing bell, the bloc’s common currency added 0.43 per cent against safe-haven Japanese yen to 126.77 yen per euro, while euro spiked to a seven-month peak of 1.0892 against another safe-haven asset Swiss Franc, demands of which often step up in times of global-scale economic uncertainties.

Besides, the single currency gained as much as 1 per cent against its British counterpart to 0.9077 pence per euro. Meanwhile, citing that the global FX markets were reflecting a Brexit trade deal optimism, a head of Forex Research at Commerzbank in Frankfurt, Ulrich Leuchtmann said, “What we are seeing is a continuation of the pricing out of hard Brexit risk”.