Euro at 2-month high on upbeat German sentiment data, political hopes

Euro prices hit a two-month high versus the dollar and held firm against other major currencies on Monday thanks to strong German business confidence and reduced anxiety about political instability in Europe’s biggest economy.

The euro fetched $1.1929, little changed from late U.S. levels last week after having hit a high of $1.1946, its highest level in two months.

The common currency has gained 3.2 percent since it slumped to a 3-1/2-month low of $1.1553 earlier this month.

Against the yen, the euro rose to 133.24 yen, its highest since Nov 16 while it also firmed on the British pound to 0.8978 pound, edging near this month’s peak of 0.9014.

The German business confidence index compiled by Ifo economic institute hit a record high in November, in another sign of strong growth in the euro zone’s largest economy.

The upbeat data was followed by positive developments on the political front after German Chancellor Angela Merkel – whose fourth term was plunged into doubt a week ago when three-way coalition talks with the pro-business Free Democrats (FDP) and Greens collapsed – was handed a political lifeline by the Social Democrats (SDP).

That helped ease worries about political instability in the country as Leaders Merkel’s conservative party agreed on Sunday to pursue a “grand coalition” with the SPD.