The trading week ended on Friday on a high for the Euro as the summit in Rome produced agreement between 4 Eurozone leaders outlined plans to push for a 130 billion euros package to boost growth equal to 1% of the currency area’s economic output. The leaders of Germany, France, Italy and Spain – the four biggest economies in the 17 member state Eurozone agreed a growth package which is expected to comprise several measures already in place to bolster spending on infrastructure and other investments. The measures to boost growth are equal to 1% of the currency area’s economic output and are viewed by analysts as more symbolic than actual. Symbolic because all four key eurozone leaders agreed to defend the single currency, but they didn’t really tell us how they are going to do it.
Meanwhile, Germany, the largest economy in the Eurozone reported business confidence plunging to its lowest level in more than two years but this, like the increasing Spanish debt fears, was largely ignored by investors seeking the more risky assets. Also helping push the Euro higher on Friday was Greece being able to form a pro-bailout cabinet. However, Monday’s markets will be closely followed as they digest Greece’s new coalition government proposing an extension to the deadline for it to reduce its budget deficit by at least two years, to 2016. The EUR/USD ended the week up 0.26%, trading at 1.2570 with the pair likely to find support at 1.2520, Friday’s low, and resistance at 1.2742, Wednesday’s high.
The move towards risk on assets saw the USD close down lower on Friday with the US Dollar Index which measures the greenback against a basket of 6 weighted currencies down 0.18%, trading at 82.41. The USD also closed down lower against most major currencies with the biggest falls seen against the oil sensitive CAD – down 0.50% and the commodity linked AUD – down 0.31%
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