Euro Recovers On Speculated Bailout Fund
Boosted by market speculation ahead of the pivotal European Union summit in three days, the EURUSD currency pair bounced off of support at 1.3660. Trading to as high as 1.3788, the single currency has now finished the day at 1.3778 or 0.08% higher than the session low.
Rumored to be around 2 trillion euros, the new European Financial Stability Facility is now expected to be a bit smaller than previously thought. For the moment, Euro leaders are contemplating boosting the facility’s capacity to 980 billion euros or roughly $1.3 trillion dollars. The total sum could be enough to backstop Europe’s systemic problems, while at the same quashing bearish speculation over the future of the European Union and its currency.
In addition, subsequent comments from both German Chancellor Angela Merkel and French President Nicolas Sarkozy are helping to drive home the importance of an effective solution following the summit meeting this weekend. Both European leaders have released a joint statement calling for a definitive resolution, no later than October 26th. European leaders have received similar pleas from emerging market leaders as well as the US Treasury Department in recent days.
The news also helped to boost major US equity benchmarks at the close. The Dow Jones Industrial Average gained by 43.94 points to finish the session higher at 11,548.60 as the S&P 500 advanced by 6.39 points to finish at 1,216.27