The Euro and the Pound Sterling gained ground against the U.S. Dollar on Monday, in light of continuing efforts to save the global financial and banking system. The effect of the rescue effort encouraged sale of the U.S. currency.
Continuing global efforts, including the rescue the government rescue of Dutch banking giant, ING, and a pledge by the South Korean government to pump liquidity into its banking system, lowered inter bank dollar lending rates, and generally eased the panic experienced in the markets over the past several weeks.
According to Philip Shaw of Investec, investors are of the mind that the global credit squeeze could soon subside, a perception attributed, in large part, to the cohesive measures undertaken by world governments over the last few weeks.
Risk appetite also seems to have grown steadily, as reported by the Wall Street Journal last week. Several major U.S. banks, including J.P. Morgan Chase, loaned several billion U.S. dollars to their counterparts in Europe, an act which stirred expectations of a decrease in LIBOR.
At 08:25 GMT, the Euro traded up .5% against the U.S. currency to $1.3480; while the Pound Sterling saw 1.2% gain against the U.S. Dollar to $1.7512. A 2% increase in European shares helped lower the dollar .DXY to 82.056, versus a basket of major currencies.