FOREX-Brexit deal helps keep euro close to 7-week high

* Dollar steady against major currencies
* Norwegian krone close to breaking all-time low
* Graphic: World FX rates in 2019 http://tmsnrt.rs/2egbfVh

By Olga Cotaga
LONDON, Oct 18 (Reuters) - The euro was hovering on Friday
around the seven-week high it reached against the U.S. dollar on
Thursday as hopes that a Brexit deal between Britain and the
European Union could prevent an economic recession in the euro
zone.
The common currency has been rattled this year by dismal
manufacturing data, as well as by worries that deepening
economic tensions between the United States and China could make
euro zone economies grow even slower.
But with Britain's prime minister Boris Johnson and EU
leaders agreeing a new deal for Britain to exit the bloc, and
with U.S.-China tensions easing, the euro was enjoying a sigh of
relief.
"Without Brexit, the euro might be now liberated from this
burden," said Antje Praefcke, a forex analyst at Commerzbank.
Moreover, expectations that the Federal Reserve may cut
interest rates at the Oct. 30 meeting added further optimism,
given that this would shrink yield differentials between the
United States and euro area.
"The fed looks more willing to cut" in the immediate term,
said Praefcke.
The euro was last trading flat at $1.1122 EUR=EBS , not far
from $1.1140, its highest since Aug. 26.
The index which tracks the dollar against six major
currencies was also last flat at $97.581 .DXY .
The pound was slightly weaker, down 0.2% at $1.2865, but
still very close to the five-month high of $1.2988 it reached on
Thursday after the U.K. and the EU agreed to a Brexit deal.
Traders worry that an initial relief at securing the
long-awaited Brexit deal could be brief, however, because the
prime minister still needs to sell the agreement to sceptical
lawmakers when parliament sits on Saturday. The yuan held steady against the dollar after data showed
China's economy grew at the weakest pace in more than 27 years
in the third quarter due to a costly trade war with the United
States and weak factory production.
In the offshore market, the yuan was last neutral at 7.0828
against the dollar. CNH=EBS
Elsewhere, the Norwegian krone was very close to breaking
the all-time low of 10.2215 it plunged to against the euro on
Thursday, last trading flat at 10.2105. EURNOK=D3
Analysts were scratching their heads why the krone was so
weak, saying one possible explanation could be the weak demand
for Norwegian equities.
"Historically the NOK has often traded weak towards the end
of the year, but our FX analysts are struggling to find the
flows that explain this seasonal weakness," said SEB analysts in
a note to clients.