By: Barbara Zigah
Markets were encouraged after the government of Ireland’s official request to the joint mission, which was specifically created to help rescue their fiscally challenged economy, and helped to boost the common currency Euro in London trading. The amount of aid has not yet been decided, but is estimated to be as much as €90 billion.
As reported at 9:10 a.m. (GMT) in London, the common currency at one point in the trading day’s session struck a 1-week peak versus the U.S. Dollar, trading at $1.3786, finally piercing the 38.2% retracement of the November 4th-18th fall.
However, it was difficult for the Euro to sustain that momentum, and the Euro quickly retreated to $1.375, but still ahead .4%. The Dollar Index, a gauge of the greenback’s strength against other major currencies, slipped .4% on the news, trading at 78.66 .DXY.
According to one currency strategist, the markets remain skeptical over the Eurozone’s recovery, as Portugal and Spain are still of major concern; as he sees it, investor wariness will likely last until the end of 2010.
In the near-term the direction of the Euro will be heavily dependent upon investor perception, and the continuing wide yield spread between the Irish and German treasury notes will be keenly watched.