June 29, 2018 / 3:37 PM / 2 months ago

FOREX-Dollar slips as EU migration deal boosts euro

* EU cuts migration deal after marathon talks

* Dollar index to make first quarterly gain in six quarters (New throughout, updates rates, comments to U.S. market open; changes dateline; previous LONDON)

By Saqib Iqbal Ahmed

NEW YORK, June 29 (Reuters) - The dollar slipped to a three-day low against the euro on Friday after European Union leaders reached an agreement on migration that eased pressure on German Chancellor Angela Merkel, but the greenback remained on track to log its best quarterly performance in six quarters.

European leaders reached a deal on migration in the early hours of Friday after tortuous talks, but details were vague, and German Chancellor Angela Merkel conceded differences remained on an issue that threatens her political career.

The summit took place in an atmosphere of political crisis, with Merkel under intense pressure at home to take a firmer stance on migration.

“The EU accord is helping to boost sentiment in the euro area,” said Karl Schamotta, director of global product and market strategy, at Cambridge Global Payments in Toronto.

The euro was up 0.85 percent against the dollar at $1.1665.

The dollar index, which measures the greenback against a basket of six currencies, was down 0.77 percent at 94.653.

Schamotta also pointed to a rally in the British pound to a two-day high after a better-than-expected revision to Britain’s first-quarter economic growth raised hopes of monetary policy tightening in the coming months, as pressuring the greenback.

Data on Friday showed consumer spending, which accounts for more than two-thirds of U.S. economic activity, rose 0.2 percent in May. Data for April was revised down to show spending rising 0.5 percent instead of the previously reported 0.6 percent jump.

“That suggests that perhaps consumers are not as positive about the future as had been hoped,” said Schamotta.

“One data point does not make a trend, but that damping of consumer spirits is something that market participants are quite concerned about,” he said.

Still, the dollar index was on pace to finish the quarter up more than 5 percent, supported mainly by diverging monetary policy - the idea that the U.S. Federal Reserve is going to normalize policy more quickly than other major central banks.

The Mexican peso hit a one-month high against the U.S. dollar, ahead of Mexico’s presidential election on Sunday.

The Canadian dollar strengthened to a 10-day high against its U.S. counterpart after a surprise expansion of the domestic economy in April raised expectations for a Bank of Canada interest rate hike next month.

China’s yuan was set for its biggest monthly fall on record, as investors grappled with worries that a bitter Sino-U.S. trade row could rattle the world’s second-biggest economy.

Reporting by Saqib Iqbal Ahmed Editing by Alistair Bell

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