The U.S. dollar fell against the Euro as the common currency continued to strengthen after yesterday's news that France and Germany proposed the creation of a recovery Fund in the amount of 500 billion euros, which will provide grants to regions and sectors of the European Union most affected by the pandemic coronavirus.
Meanwhile, the promising results of the vaccine trial COVID-19 reduced demand for safe havens and the US dollar rose to almost a month high against the Japanese yen.
«Franco-German proposal constituted a major step forward in the direction of the joint fiscal potential for sustained fiscal stimulus to support economic recovery», — said Lee Hardman, currency analyst at MUFG.
The single currency was also supported by a study which showed that German investor sentiment in may had improved much more than expected, as concerns about the impact of the pandemic of the coronavirus in the largest economy of Europe weakened.
Meanwhile, U.S. data showed that the construction of homes in the U.S. fell in April to a five-year low, underlining concern that the new coronavirus crisis will lead to the deepest recession in the second quarter after the great depression. Housing construction fell in April for 30.2% to a seasonally adjusted annual rate of 891 000 units — the lowest level since the beginning of 2015, said the Ministry of Commerce on Tuesday.
Data on housing construction for March was revised to show that housing is reduced to a rate of 1,276 million units instead of reducing to 1,216 million units, as previously reported. Economists had forecast that construction will be reduced to 927 000 units.
The Ministry of Commerce also said that building permits fell by -20,8% to an annual rate of 1,074 million units, after falling 5.7% to revised 1,356 million units in March. It was expected that building permits, an indicator future housing demand will be reduced by -26,1% to 1 million, compared to 1,353 million originally reported for the previous month.
However, the fact that the government abolish the measure of lock-related coronavirus, helped to give investors optimism that the economy may soon return to normal.
Information-analytical Department TeleTrade