FOREX-Euro stabilises as investors welcome Fed buying corporate bonds

* Euro gained 2% so far this month
* Dollar stable versus safe-haven Japanese yen
* Graphic: World FX rates in 2019 http://tmsnrt.rs/2egbfVh

(Recasts, adds new chart and comment and German ZEW survey)
By Olga Cotaga
LONDON, June 16 (Reuters) - The euro was little changed
against the U.S. dollar on Tuesday as the U.S. Federal Reserve
prepared to start its corporate bond-buying scheme, while a
report flagging the possibility of more fiscal stimulus shored
up investor confidence.
The U.S. dollar had slipped and riskier currencies rallied
during Asian sessions, but after European traders joined the
market, most major currencies stabilised, all trading broadly
neutral.
Still, after a 2% rise so far this month, the euro was close
to near $1.15, this year's high.
The Fed said it would start buying corporate debt on Tuesday
as part of an already announced stimulus scheme, and launched
its Main Street Lending Program for businesses. "We're unfortunately still in this environment where there
is still a great deal of uncertainty so when we have episodes
where central banks are being seen to be either adding liquidity
or supporting the markets as the Fed did in that particular
regard, that provides impetus for a risk recovery," said Jeremy
Stretch, head of G10 FX strategy at CIBS Capital Markets.
Investor sentiment was further supported by a Bloomberg News
report that President Donald Trump's administration was
considering a nearly $1 trillion infrastructure programme to
boost the economy, citing anonymous sources. Taken together, the news reinforced a belief authorities
will do what it takes to get the world's biggest economy back on
track.
Fed Chairman Jerome Powell is due to testify before the
Senate Banking Committee on Tuesday. He will deliver the same
testimony on Wednesday before the House Financial Services
Committee.
Investors will be listening for hints the Fed is willing to
do more.
"If so, equities and risk-linked currencies are likely to
continue their journey north, as investors keep diverting their
capital out of safe havens, the likes of the U.S. dollar, the
yen and the franc," said Charalambos Pissouros, senior market
analyst at JFD Group.
The euro was flat at $1.1316 EUR=EBS , recovering from
falls a couple of days back after traders feared a second wave
of coronavirus and decided to cash in on any gains.
Beijing banned some people from leaving the Chinese capital
and halted transportation services on Tuesday to try to contain
a fresh coronavirus outbreak.
Global cases of the novel coronavirus have reached over 8
million. Deaths stand at over 434,000 and have doubled in seven
weeks. The dollar/yen was neutral at 107.28 JPY=EBS .
The Bank of Japan kept monetary settings steady on Tuesday
and stuck to its view the economy will gradually recover from
the coronavirus pandemic, signalling it has taken enough steps
to support growth for now. Market participants are awaiting the U.S. retail sales and
industrial production due later in the day.
German investor sentiment rose more than expected in June on
hopes that the worst of a sharp downturn in Europe's largest
economy prompted by the coronavirus pandemic will be over by the
summer, a survey showed on Tuesday, but this has not had any
impact on the common currency.

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Euro close to this year's high https://tmsnrt.rs/30SDaSd
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