Euro hits three-year high on German government deal

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The euro surged to a three-year high as Germany edged closer to forming a government, heaping more pressure on the dollar before inflation data. European stocks advanced with U.S. equity futures as BlackRock Inc. and JP Morgan Chase & Co. kicked off a busy earnings season.

The euro was poised for its strongest close since December 2014, leading most G10 currencies higher against the greenback. The Stoxx Europe 600 Index climbed for the first day in three. Hong Kong’s equity index extended a record winning streak as data showed Chinese exports rose in December. Oil fell after a four-day rally, even as most commodities climbed, with gold heading for its highest close since September.

Reports that German policymakers are set to resolve a months-long political stalemate added to news yesterday that the European Central Bank is open to tweaking its policy guidance soon to align it with a strengthening economy. Meanwhile, stock investors looking for clues on whether decade-high stock prices can keep rising are shifting their attention toward earnings, with Wells Fargo & Co. also set to report today.

Elsewhere, an exchange-traded fund tracking Brazilian equities dropped in after-hours U.S. trading after S&P Global Ratings cut Brazil’s sovereign credit rating deeper into junk territory. Bitcoin steadied after four days of losses amid increasing scrutiny from regulators around the world.