Euro maintains a firm tone in the EU Common Recovery Fund, yen soft By Reuters

By Hideyuki Sano

TOKYO (Reuters) – The euro held on Wednesday, basking in the wake of a Franco-German proposal for a joint fund that could move Europe closer to fiscal union.

The dollar also rose higher toward the safe haven yen to the edge near a five-week high, though limited by renewed skepticism about the development of the coronavirus vaccine.

The Euro was flat at $ 1.0924 (), after hitting a two-week high of $ 1.09755 in European trade.

The single currency also fetched 1,0615 francs () after rising almost 1.0% so far this week against the currency of the safe haven, while against the yen it stood near five-week highs of 118.20 yen ().

“The Franco-German deal is big news. This has made it difficult for speculators to close their short positions on the currency,” said Kyosuke Suzuki, director of forex at Societe Generale (OTC :).

France and Germany on Monday proposed a € 500 billion ($ 543 billion) recovery fund to provide grants to regions and sectors most affected by the coronavirus pandemic and to allow loans from the European Commission on behalf of the EU.

Although the proposals face opposition from wealthier EU members, the EU could move one step closer to a transfer union that would help mitigate various economic imbalances in the currency block.

Helping the single currency was also a study showing that the German investor sentiment improved much more than expected in May, as concerns eased the impact of the coronavirus pandemic on Europe’s largest economy.

USA. dollar rose 0.2% against the yen to 107.94 yen, near a five-week high of 108,085 hit in the U.S. trading Tuesday.

USA. currency lost traction on Tuesday after a report from medical news site STAT said early data from Moderna Inc’s (O 🙂 COVID-19 vaccine was inadequate, and pouring cold water on optimism triggered a day earlier by the company’s announcement.

Data showed U.S. Home building fell the most with record last month and permits for future construction tumbled, a stark reminder of the heavy financial toll pronounced at the outbreak.

() Stood at 99,571, mainly stuck in the well-worn range since the beginning of April.

Sterling traded for $ 1.2251 , flat so far in the day, while the Australian dollar fetched $ 0.65385 , after hitting a two-month high of $ 0.6585 overnight.