* Australian dollar rises to 10-week high vs USD
* Sterling lower as low UK inflation weighs
(Updates to U.S. afternoon)
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 crisis 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.
The single currency was up 0.54% at $1.0983 EUR= , its
highest since May 1.
The dollar found little support from the release of the
minutes of the U.S. Federal Reserve's most recent policy-setting
meeting, which showed policymakers agreed to use their tools "as
appropriate" to support the economy and re-upped a pledge to
keep interest rates near zero. The U.S. dollar, which draws flows when investors shun risk,
was broadly weaker on the day as market participants appeared to
bet on hopes of a strong economic 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
0.42% at 99.138, on pace for its third straight day of losses.
The risk-sensitive Aussie dollar AUD=D3 rose 0.98% to a
10-week high against the U.S. currency.
Sterling fell 0.14% GBP= against the U.S. dollar after
data showed UK inflation fell to 0.8% in April, its lowest in
nearly four years.
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GRAPHIC-World FX rates in 2020 http://tmsnrt.rs/2egbfVh
GRAPHIC-Euro positions and volatility https://tmsnrt.rs/2XdNpwH
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