The euro continued to make significant gains against the US dollar today. Further rumours about Middle East and Russian buyers of European debt helped send the single currency higher, while weak housing data from the states dragged the greenback lower.
EUR/USD briefly went above $1.35 to hit an eight week high of $1.3537. A report in a German newspaper outlined a prospective new restructuring plan for Greece. The report said that the German government was drawing up a plan to allow the Greeks to buy back their own debt using a eurozone bailout fund. The report has been denied by the German parliament.
The seventeen-nation currency has had a few positive blips recently, through the ZEW figures yesterday, speculation of sovereign wealth funds purchasing EU debt and JC Trichet alluding to an increase in the EU’s interest rate. However, the macro issues affecting the region are still prevalent and should set the overall tone for the year. Any boost the euro has received since the start of the year is surely just band-aids re-attaching a dismembered limb.
Is everything going to be okay in Europe or is this simply another calm before another storm? Please add any thoughts and comments below.
Tom Hampton
Analyst – Caxton FX
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