The euro climbed against major rivals on Friday, after the European Union reached a deal over the divisive issue of refugees, removing some political risk that is been hanging over the shared currency.
German Chancellor Angela Merkel had been calling for an EU-wide deal on migration at the summit in Brussels. After nine hours of talks, a deal was reached early Friday to aid coastline countries such as Italy, by redistributing some of the migrants rescued in the Mediterranean.
“The agreement takes a lot of the pressure off not just the EU as a whole but specifically off German Chancellor Merkel, who was under intense pressure from her interior minister to do something to stem migration. The agreement probably means no further worries about her coalition falling apart. It is therefore positive for the euro,” said Marshall Gittler, chief strategist at ACLS Global.
Italy had been vowing to veto a joint statement over the summit unless EU members find a new way to deal with migration, and that situation had been weighing on the euro. As well, Merkel had been under pressure at home from the more conservative Bavarian sister party of her Christian Democrats—the Christian Social Union—over this issue.
The CDU needs the CSU to hold her fragile coalition government, which is at risk of failing if she doesn’t come home with a solution to tackle immigration, together.
The shared currency EURUSD, +0.5186% was last trading at $1.1628, compared with $1.1569 late Thursday in New York. That strength left the popular ICE U.S. Dollar Index DXY, -0.42% heavily weighted toward the eurozone currency, down 0.6% at 94.853.
As the week nears its close, the greenback is looking at a gain of 0.4%. For the quarter that is about to finish, it is up 5.2%. The euro is set to lose 0.3% and 5.5% for the week and the quarter respectively, with one session remaining.
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Brexit will also be on the agenda at the Brussels summit, but with the U.K. still unclear about its desired post-divorce relations with the continent, the meeting is expected to yield little progress.
The British pound GBPUSD, +0.3059% dropped to its lowest level since early November 2017, buying $1.3110, compared with $1.3078 on Thursday.
Elsewhere, the Mexico’s peso USDMXN, -0.0477% continued to stabilize and reversed a recent selloff. Mexicans are headed to the polls on Sunday to elect a new president in a vote that could be the beginning of a very different political era for the country. One dollar last bought 19.7104 pesos, down 19.7086 from Thursday.
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