This is indeed breaking news. In the wake of the EU announcement of a 1 TRILLION dollar package to help end the European bond crisis that began in Greece and is now threatening other nations such as Portugal and Spain, the Euro has jumped over 2% in value against the dollar and is now trading at $1.3033. Against the Yen, the Euro is exhibiting a similar strength, increasing its value by 2.7%.
The European stock markets are also showing tremendous gains today, with indexes rising by up to 10%. It’s a green day across the board.
As for the Euro, the enlistment of European leaders, primarily of France and Germany to show their support for the Euro and to back up their rhetoric with action allayed many of the fears in the market of a ballooning financial crisis in Europe. The new package which consists of loans and grants is truly a demonstration of financial determination on the part of the EU.
For the short term, at least, the Euro seems to have bottomed out and we will likely see some sort of rebound (beyond what we see today). However, in the long run, we still need to wait and see how the long and difficult process of financial rehabilitation the weaker members of the Euro-zone have to go through will progress and what it will amount to.
You may be able to delay a financial crisis with loans but you need to dig deeper and provide real solutions in order for a true improvement to begin.
In other news, the price of oil is rising by over 4%. This is likely to contribute to a weakening of the dollar as there’s an inverse correlation between the USD and oil prices.
