Investors surged back into riskier assets in spectacular fashion as equity markets produced a stunning rally subsequent to eurozone leaders defying expectations of more delaying tactics. As soon as news broke of Europe’s latest master plan which could fix Greece and end the two-year long sovereign debt crisis, FX traders piled back into anything other than the US dollar. The euro was the principal beneficiary, jumping by almost four cents on the day against the under-fire dollar while notching seven-week highs against the pound. Sterling suffered an absolute beating at the hands of its more yield attractive counterparts with some analysts expecting next week’s UK Q3 growth figure to return a negative print. The pound did manage to spike against the US dollar though as investors forcefully dismantled risk adverse positions in which the dollar is used as protection against global threats. The Canadian dollar bulldozed its way past parity against the greenback; the Australian dollar advanced at an astonishing pace; emerging market currencies such as the Polish zloty surged, while the Swedish krona rose even after Sweden’s Riksbank said interest rates will remain at two per cent well into 2012 following its monetary policy meeting.
Sterling
The pound rose to within touching distance of two-month highs as investors forcefully took apart built up US dollar protection lines after Europe, at long last, announced its master plan to tackle disastrous sovereign debt troubles. Sadly, this was about as good as it got for the pound which suffered an absolute thrashing in most other crosses.
US dollar
The US dollar’s trade weighted index, which tracks its performance against a basket of major currencies, plunged at an incredible pace to nearly two-month lows. Helping to facilitate a mass unwinding of defensive positions, in which the dollar is used as a safety net from global risks, was data showing the US economy had grown at its fastest pace in a year from July through to September along with the elation from the euro area’s audacious plan to end its government debt crisis.
Euro
As soon as news broke of the Franco-German-led line of attack on fixing Europe’s fiscal health, financial markets witnessed a spectacular and record-breaking response. The comprehensiveness of the latest battle plan, which could fix Greece and stop contagion from spreading into Italy, dispatched investors towards anything other than the safe haven US dollar.
Japanese yen
The yen notched another record high against the under-fire US dollar for the fourth time in five days as Japanese authorities continue to think over more yen-weakening intervention action.
Travelex Global Business Payments Malta, freephone: 800 733 22, www.travelex.com/mt/