* Australian dollar rises to 10-week high vs USD
* Sterling higher even as low UK inflation still a concern
(New throughout, updates prices, market activity, comments to
U.S. market open; new byline, changes dateline; previous LONDON)
By Saqib Iqbal Ahmed
NEW YORK, May 20 (Reuters) - The U.S. dollar fell to a more
than two-week low against the euro as the common 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
pandemic.
France and Germany have proposed a 500 billion euro ($543
billion) Recovery Fund to offer grants to regions and sectors
hit hardest by the coronavirus pandemic and to allow borrowing
by the European Commission on behalf of the whole 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 highs vs the dollar as
well as major peaks achieved in early May and April," said Joe
Manimbo, senior market analyst, at Western Union Business
Solutions in Washington.
"There should be major technical resistance at these levels,
but should the euro break higher, we could see prices not seen
since March," he said.
The euro was up 0.63% at $1.0992, its highest since May 1.
The U.S. dollar, which draws flows when investors shun risk,
was broadly weaker on the day as investors clung to hopes of a
recovery from a coronavirus-fueled slump.
The U.S. Dollar Currency Index =USD , which measures the
greenback's strength against six major currencies, was down
0.52% at 99.04, on pace for its third straight day of losses.
The risk sensitive Aussie dollar AUD=D3 rose 0.93% to a
10-week high against the U.S. currency.
Investors await the release later on Wednesday of the
minutes from the April 29 FOMC meeting, which could shed light
on the U.S. Federal Reserve's thinking as it seeks to bolster
the economy.
"Equity and currency markets will be particularly sensitive
to any indications of further actions being discussed by the
members. Additional measures could be supportive of stocks which
could send the dollar lower," said Manimbo.
Sterling was 0.15% higher against the U.S. dollar but clouds
lingered over the pound after UK inflation fell below 1% to its
lowest in nearly four years.
The Canadian dollar strengthened against its U.S.
counterpart on Wednesday as hopes for global economic recovery
supported equity markets and investors shrugged off domestic
data showing deflationary pressures. <^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
GRAPHIC-World FX rates in 2020 http://tmsnrt.rs/2egbfVh
GRAPHIC-Euro positions and volatility https://tmsnrt.rs/2XdNpwH
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