* Dollar steady against major currencies
* Norwegian krone sinks to all-time low
* Graphic: World FX rates in 2019 http://tmsnrt.rs/2egbfVh
(Updates prices, adds some context)
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, amid 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.
Expectations that the Federal Reserve may cut interest rates
at its next meeting added further optimism, given that this
would shrink yield differentials between the United States and
euro area.
Money markets are pricing in an 82% chance of a cut at the
Oct. 30 meeting, Refinitiv data shows.
"The Fed looks more willing to cut" in the immediate term,
said Praefcke.
The euro was last trading flat at $1.1129, not far
from $1.1140, its highest since Aug. 26.
The current account surplus of the 19 countries sharing the
euro widened to 27 billion euros in August from 22 billion euros
a month earlier, data from the European Central Bank showed on
Friday, but this did not have an impact on the euro.
The index which tracks the dollar against six major
currencies was also last flat at 97.536.
The pound, last neutral at $1.2892, was 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. Euro/sterling was also
flat at 86.32 pence.
Traders worry that 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.
BNP Paribas analysts expect the pound to rise to $1.33 if a
deal is agreed on Saturday. But sterling may pare its recent
gains if a deal is rejected, "although the market may be quick
to fade any sterling pullback, with bullish sentiment remaining
entrenched," BNP Paribas analysts said.
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 7.0865
against the dollar.
Elsewhere, the Norwegian krone broke another all-time low of
10.2335 against the euro and was last trading down 0.1% at
10.2285.
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.
(Reporting by Olga Cotaga
Editing by Peter Graff, William Maclean)