EURO gains strength against the dollar after Spain rescues its banks
Monday, June 11th, 2012 6:08:24 by Hamza Jahangir
The euro was poised for its biggest daily rally against the dollar in almost eight months on Monday, after Spain secured help for its debt-stricken banks and as Chinese economic data was not as bad as the market had feared.
The euro zone decided to lend its fourth-largest economy up to 100 billion euros ($125 billion) to reassure investors and prevent the threat of a bank run in case Greece’s crisis heats up again after elections this coming weekend.
This saw the euro spike almost 1 per cent to $1.2635, pulling away from a near two-year low of $1.2288 hit earlier this month. Early in the session, it rose as high as $1.2672 on stop-loss buying, hitting its highest level since
May 23.
“Euro zone leaders rose to the occasion. They had no choice. The Spanish bailout means Europe will not permit ‘runs’ to sink their banking system,” said David Kotok, chairman of Cumberland Advisors. Against the yen, the single
currency also rose as high as 100.90 yen, its highest level in more than two weeks to last settle around 100.60, still up 1.2 per cent on the day.
“The market welcomed the fact that the euro zone took pre-emptive steps. The amount of support is big enough to satisfy investors,” said Yunosuke Ikeda, senior strategist at Nomura Securities.
Chartists said the euro could rise to around $1.2837, its 50 per cent retracement of its decline from March peak of $1.3386 to a two-year low of $1.2288 hit on June 1. For now, it was ensconced between bids at 1.2610 and offers
at 1.2670.
A string of Chinese economic data released over the weekend, while showing the extent of the country’s economic slowdown, was not as bearish as many traders had feared, following Beijing’s first interest rate cut since the global
financial crisis on Thursday.
Tags: chinese economy, Euro, European Union, Financial Crisis, U S Dollar
Short URL: https://www.newspakistan.pk/?p=25425
Posted by Hamza Jahangir
on Jun 11 2012. Filed under Latest News.
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