* The Australian dollar rises to 10 weeks high vs USD
* Sterling higher, even as low UK inflation is still a concern (news everywhere, updates prices, market activity, comments on US market open; new byline, changes dateline; formerly LONDON)
By Saqib Iqbal Ahmed
NEW YORK, May 20 (Reuters) – U.S. dollar fell to more than two weeks low against the euro as the single currency enjoyed a boost from the recently announced proposal for a common fund that could move Europe closer to a fiscal union as it tries to counter the economic hit from the coronavirus the pandemic.
France and Germany have proposed a EUR 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.
The euro also found strength from survey data on Tuesday that showed German investor sentiment improved much more than expected in May.
“The euro is challenging yesterday’s high against the dollar as well as the big peaks achieved in early May and April,” said Joe Manimbo, senior market analyst, at Western Union Business Solutions in Washington.
“There should be great technical resistance at these levels, but should the euro break higher, we could see prices not seen since March,” he said.
The euro rose 0.63% to $ 1,0992, its highest since May 1.
USA. The dollar, which pulls cash when investors take risks, was largely weaker that day as investors held on to the hope of a recovery from a coronavirus-driven decline.
USA. The Dollar Currency Index, which measures the strength of the greenback against six major currencies, fell 0.52% to 99.04, in line with its third straight day of loss.
The risk-sensitive Aussie dollar rose 0.93% to a 10-week high against the U.S. payment.
Investors are awaiting release later Wednesday on minutes of the April 29 FOMC meeting, which could shed light on the U.S. The Federal Reserve is thinking as it seeks to strengthen the economy.
“Equity and foreign exchange markets will be particularly sensitive to indications of further action being discussed by members. Additional measures may be supportive of stocks that could lower the dollar lower,” Manimbo said.
Sterling was 0.15% higher against U.S. But clouds remained above the pound after British inflation fell below 1% to its lowest in almost four years.
The Canadian dollar strengthened against its US dollar counterpart on Wednesday as hopes of global economic recovery supported stock markets and investors pulled away from domestic data showing deflationary pressures.
(Reporting by Saqib Iqbal Ahmed; Editing by Lisa Shumaker)