Euro hits fresh highs on peace talks in Ukraine, | Money News

By Stefano Rebaudo and Rocky Swift

(Reuters) -The euro hit a fresh 1-1/2-week high in opposition to a weakening greenback on Thursday as buyers monitored Ukraine peace talks and shifted their focus to the Bank of England’s coverage assembly later in the session.

The U.S. greenback remained beneath stress amid growing issues over partisanship creeping into key U.S. establishments.

Initial U.S. jobless claims, due later in the session, might be carefully watched following final week’s disappointing nonfarm payrolls report, which triggered a dovish repricing of the Federal Reserve easing path and a slide in the dollar.

The euro rose 0.14% to $1.1677, its highest stage since July 28, with a potential peace deal in Ukraine seen as a constructive driver for the only currency.

Ukrainian President Volodymyr Zelenskiy mentioned he deliberate contacts with Germany, France and Italy on Thursday to debate progress towards peace.

“Sectors to benefit (from a peace deal) should be European consumers, growth-sensitive and construction-related sectors,” mentioned Mohit Kumar, economist at Jefferies.

“It should also be positive for Eastern Europe as most of the reconstruction efforts would likely flow through Eastern European economies.”

Sterling was regular forward of a BoE coverage announcement, with markets broadly anticipating one other fee cut.

Markets will watch the anticipated three-way voting break up for any signal that the central bank would possibly change its steering on a “gradual and careful” easing path.

“We suspect conviction levels are low in the supposed consensus view that rates can only go down and pressure affected currencies,” mentioned Geoff Yu, strategist at BNY, after warning that markets could also be too complacent about stagflation dangers.

“The Bank of England will kick off what we expect to be a new run of cuts through August and September in Europe, but over-committing to easing risks policy error and prolonging stagflation,” he added.

The Swiss franc rose 0.20% to 0.8047 versus the greenback, whilst Swiss President Karin Keller-Sutter returned from Washington empty-handed after a journey geared toward averting a crippling 39% tariff on the nation’s exports to the U.S.

“While we still believe that a deal will ultimately be reached, it is likely to be far more expensive than Switzerland had hoped,” mentioned Michael Pfister, strategist at Commerzbank.

Last week, U.S. President Donald Trump fired the official chargeable for the labour knowledge he didn’t like, and focus is centring on his nomination to fill a coming emptiness on the Fed’s Board of Governors and candidates for the following chair of the central bank.