In This Article:
* Euro rides high ahead of EU summit later in week
* Europe's virus conditions also seen relatively favourable
* Risk sentiment supported by U.S. inflation, vaccine news
* Yen barely budges after BOJ stands pat as expected
* 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 for COVID-19.
The euro rose to $1.1400, after reaching its highest level since March 10 at $1.1423 earlier in the trade.
Against the yen, the common currency hit one-month high of 122.47 while it had scaled a two-week high of $0.91125 British pound the previous day and last stood at 90.690 pence .
"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 one-month low at 96.056. The index last stood at 96.225.
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 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 0.24% to $0.6992.
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 $1.2567.
The yen stood at 107.28 yen per dollar, little changed after the Bank of Japan kept monetary policy steady and maintained its stance that the economy would gradually recover from the COVID-19 pandemic.