* Euro deal seen supporting global recovery - analysts
* EUR hits four-month top before retreating
* Focus shifts to U.S. fiscal hopes
* Graphic: World FX rates in 2020 https://tmsnrt.rs/2RBWI5E
By Tom Westbrook
SINGAPORE, July 21 (Reuters) - The euro marked a fresh
four-month high and commodity currencies found support on
Tuesday, after European countries agreed on a rescue package for
the bloc's coronavirus-hit economies.
The hard-won deal - a compromise on concerns that thrifty
northern states had about handouts for more profligate
neighbours - was hailed as an important signal of unity by
Europe's leaders and as a foundation for recovery. It pushed the euro EUR=EBS 0.2% higher to $1.1470, its
strongest since early March, although it soon retreated back to
just below flat since the agreement was widely expected.
"The deal is a positive, a show of solidarity, securing a
stronger economic recovery," said Christopher Wong, senior FX
strategist at Maybank in Singapore.
"Markets-wise, the positive news was already priced in," he
said. Further gains from here were likely to be "sticky,"
although a break past the euro's March top of $1.1495 could open
the door for a rise to $1.16 levels, he added.
The deal provided support to fragile broader sentiment and,
along with encouraging results from several COVID-19 vaccine
trials, kept safe havens such as the greenback under pressure.
Against a basket of currencies =USD the dollar made a
fresh four-month trough at 95.634 and struggled for headway in
the Asian session.
The Japanese yen JPY= was steady at 107.21 per dollar.
The Australian dollar clung on above 70 U.S. cents after the
central bank offered few surprises in minutes from last month's
meeting or a speech from Governor Philip Lowe. AUD/
Lowe said Australia's monetary policy would remain
accommodative for as long as necessary and added that although
he would prefer a cheaper Aussie dollar, its 27% recovery from
March lows was supported by fundamentals.
"We can't, at the moment, make the case that the Australian
dollar is misaligned," he said in webcast remarks. The Aussie
AUD=D3 last sat at $0.7018 and the kiwi NZD=D3 at $0.6566.
WARINESS REMAINS
The EU deal, struck on the fifth morning of a fractious
summit, delivers a 750 billion euro recovery fund which French
President Emmanuel Macron said can meet the challenge of the
coronavirus crisis.
It followed a wave of positive early results from vaccine
trials, including a closely-watched candidate from Oxford
University. But both pieces of good news come with geopolitical tensions
rising and with cases surging in the United States, where market
attention is turning to the likelihood of a new fiscal package.
Advisers to President Donald Trump and congressional
Democrats were set to discuss the next steps in the national
response on Tuesday, with congressional Republicans saying they
were working on a $1 trillion relief bill. Global miner BHP BHP.AX warned the resurgent virus
threatened commodity demand and widened its production guidance
range for next year. "Investors have not stopped looking over their shoulders,"
strategists at Singapore's DBS Bank said in a note.
"Until proven wrong, it is hard to ignore the eventual drag
on economic activities and potential loan losses at banks from
the coronavirus resurgence."
In the meantime, the pound GBP= hung on to broad gains
made overnight as many traders closed out long euro/pound
positions in the wake of the EU Summit progress and ahead of
fresh Brexit talks beginning on Tuesday. GBP/
It briefly touched a month high of $1.2684 before retreating
to flat for the session at $1.2655, and against the euro it was
close to a week high at 90.33 pence per euro EURGBP= .