* Graphic: World FX rates in 2020 https://tmsnrt.rs/2RBWI5E
By Julien Ponthus
LONDON, May 21 (Reuters) - The euro steadied on Thursday
after a four-day rising streak that was fuelled by optimism of a
closer fiscal union in Europe fizzled out, with U.S.-China
tensions and concerning economic data coming to the fore.
France and Germany proposed a 500-billion-euro ($543
billion) recovery fund on Monday to offer grants to regions and
sectors hit hardest by the coronavirus pandemic, raising hopes
that European policymakers were taking more decisive steps to
tackle the economic damage. The news lifted the euro from the $1.08 levels where it has
been languishing for the last two months and pushed it towards
$1.10, though the single currency remains more than 4% away from
the 2020 highs of $1.15 levels tested in early March.
But on Thursday, the euro EUR=EBS took a breather, easing
down 0.04% to $1.0974 as stock markets across Europe traded in
negative territory as fresh data again showed the devastating
impact of the coronavirus on the euro zone economy, though the
situation eased as some governments partially lifted lockdowns.
Having crashed to what was by far its lowest reading in the
survey's nearly 22-year history last month, IHS Markit's Flash
Composite Purchasing Managers' Index, seen as a good gauge of
economic health, recovered to 30.5 from April's 13.6.
"The big picture is that the index is consistent with
economic activity in the region remaining very depressed even as
lockdown measures are being gradually lifted," said Jessica
Hinds at Capital Economics.
While the business slump in France and Germany eased to some
extent, the data was nevertheless less favourable than expected,
while British PMI data showed the economy flattened out a bit
this month from April's nosedive.
Hopes of a quick economic recovery have been dashed in
recent days as recent openings in Asian economies have shown
that consumers are slow to return to normal behaviour while the
global search for a vaccine remains elusive.
The pound, which remains under pressure as weak inflation
drives speculation the Bank of England may cut interest rates
below zero, pared some losses after the PMI data was released.
Sterling GBP=D3 was down 0.08% at $1.2227 and lost only
0.04% against the euro EURGBP=D3 .
"Some improvement in the UK figures has bolstered the
pound," said Chris Beauchamp, Chief Market Analyst at IG.
With risk appetite broadly on the back foot, the greenback
rose 0.13% to 99.30 =USD against a basket of its rivals while
U.S. stock futures ESc1 were trading in the red as Sino-U.S.
trade tensions swirled in the background.
Diplomatic relations between the world's two biggest
economies have soured in recent weeks, with U.S. President
Donald Trump attacking China's handling of the coronavirus
outbreak.
The latest salvo came when Trump took to Twitter late on
Wednesday to accuse China of a "massive disinformation campaign"
seeking to damage his re-election chances, "so they can continue
to rip-off the United States".
The dollar was slightly up, edging 0.1% higher against the
yuan in onshore trade CNY= to 7.1001.
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