FOREX-Euro hits 4-month high vs dollar on stimulus, recovery hopes

* Graphic: World FX rates in 2020 https://tmsnrt.rs/2RBWI5E

By Hideyuki Sano
TOKYO, July 15 (Reuters) - The euro rose to a four-month
high against the dollar on Wednesday on hopes European Union
leaders may agree on stimulus and deepening fiscal integration
to shield the economy from the pandemic.
The dollar was on the defensive, particularly against other
growth-leveraged currencies such as the Australian dollar,
following an uptick in U.S. inflation and news of progress in
vaccine development.
The euro rose to as high as $1.1423 EUR= , its highest
level since March 10 and not far off its peak so far this year
of $1.1495.
Against the yen, the common currency hit one-month high of
122.47 EURJPY= while it scaled a two-week high against the
British pound at 91.125 pence EURGBP=D4 .
"Germany, France and Italy have all taken severe lockdown
steps and as a result the coronavirus now appears to be under
control. The economy could be gradually recovering," said Bart
Wakabayashi, Tokyo Branch manager of State Street Bank and
Trust.
The euro has been helped by hopes the European Union could
agree at its summit later this week on a rescue financing
package that will limit the economic damage to the bloc from the
coronavirus pandemic.
The euro's strength helped to push the dollar index to
96.056, one-month low.
The dollar extended losses on Tuesday after U.S. consumer
prices rebounded 0.6% month-on-month, the most in nearly eight
years, in June, easing worries about deflationary pressures from
the economic downturn.
Further boosting investors' risk appetite, Moderna Inc's
MRNA.O experimental vaccine for COVID-19 showed it was safe
and provoked immune responses in all 45 healthy volunteers in an
ongoing early-stage study, U.S. researchers reported on
Tuesday. Against that backdrop, the risk-sensitive Australian dollar
rose 0.2% to $0.6985 AUD=D4 .
Sterling, however, underperformed after data showed
Britain's economy was recovering more slowly than forecast.
Gross domestic product rose by 1.8% in May after falling by
a record 20.8% in April, well below forecasts in a Reuters poll.
The pound last traded at $1.2571 GBP=D4 .
The yen was little moved at 107.27 yen per dollar JPY= ,
off two-week high of 106.635 ahead of the Bank of Japan's policy
announcement expected later in the day.
The central bank is expected to keep monetary policy
steady. The Canadian dollar bounced back from a two-week low,
changing hands at C$1.3600 per U.S. dollar CAD=D4 , despite the
prospect of travel restrictions between Canada and the United
States being extended. The Canadian central bank is expected to leave rates on hold
at a policy announcement on Wednesday, with investors likely to
focus on the bank's outlook for the economy and potential
guidance on its bond-buying program.