The euro along with pound sterling surged in currency trading on Wednesday just after leaders pledged to back up European debts and Portugal raised 1.25 billion in a prosperous bond auction. The U.S. dollar was the G10 laggard.
All eyes were being on Portugal as it attempted to tap international debt markets for the first time this year. Yesterday Portuguese Prime Minister Jose Socrates presented the strengthening deficit in an effort to shore up morale. The activities seemed to function as the nation raised the total allotment and with a yield of 6.70% for nine years, cheaper when compared to the 7% which had been anticipated.
The original response in the market was small but it begun to cascade when German Chancellor Angela Merkel shared with reporters Germany is going to do everything necessary to guard the euro is prepared to change the terms of a 750 billion rescue fund.
One further boost came when Bloomberg announced that European leaders are looking for a plan to loan Portugal 60 billion, buy back Greek financial debt reduced interest rates on bailout funds. The euro climbed pretty much two hundred pips and brought the pound sterling along for the ride due to the improvement in regional stability.
The U.S. dollar slumped against all G10 foreign currencies regardless of a slight upgrade in the outlook in the Beige Book. Weighing on the dollar were comments from Dallas Fed President Richard Fisher said he feels QE2 to be completed in his 1st remarks since joining the FOMC at the outset of the year. Fisher has been hawkish prior to now and there has been rumours he would put pressure on the Fed to finish the bond buying program, rather, he said he "doesn't know" if he will dissent. He used the presentation to take aim at U.S. government's "fiscal nonfeasance" in many of the strongest words from the Fed in some time. "There are limitations to what we can do on the monetary front to provide the bridge financing to fiscal sanity," he said. Fisher might have had a point as the U.S. budget deficit for December was reported at $80 billion and the fiscal year-to-date deficit is at $288 billion when compared with $270 billion in 2009. Content provided by AroundFX.com
All eyes were being on Portugal as it attempted to tap international debt markets for the first time this year. Yesterday Portuguese Prime Minister Jose Socrates presented the strengthening deficit in an effort to shore up morale. The activities seemed to function as the nation raised the total allotment and with a yield of 6.70% for nine years, cheaper when compared to the 7% which had been anticipated.
The original response in the market was small but it begun to cascade when German Chancellor Angela Merkel shared with reporters Germany is going to do everything necessary to guard the euro is prepared to change the terms of a 750 billion rescue fund.
One further boost came when Bloomberg announced that European leaders are looking for a plan to loan Portugal 60 billion, buy back Greek financial debt reduced interest rates on bailout funds. The euro climbed pretty much two hundred pips and brought the pound sterling along for the ride due to the improvement in regional stability.
The U.S. dollar slumped against all G10 foreign currencies regardless of a slight upgrade in the outlook in the Beige Book. Weighing on the dollar were comments from Dallas Fed President Richard Fisher said he feels QE2 to be completed in his 1st remarks since joining the FOMC at the outset of the year. Fisher has been hawkish prior to now and there has been rumours he would put pressure on the Fed to finish the bond buying program, rather, he said he "doesn't know" if he will dissent. He used the presentation to take aim at U.S. government's "fiscal nonfeasance" in many of the strongest words from the Fed in some time. "There are limitations to what we can do on the monetary front to provide the bridge financing to fiscal sanity," he said. Fisher might have had a point as the U.S. budget deficit for December was reported at $80 billion and the fiscal year-to-date deficit is at $288 billion when compared with $270 billion in 2009. Content provided by AroundFX.com
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