The Euro rose in the previous European session as Greece’s bond buyback plan increased hopes that the indebted country would be able to reduce its debts by 2020. The US dollar declined on the other hand as US lawmakers could not seem to agree on the measures to avert the so-called fiscal cliff. In today’s European trades, the single currency is anticipated to extend gains versus the Greenback supported by positive news coming from Spain and China.
Greece offered to buy back government securities worth 10 Billion Euros, a condition that would give way for the country to receive the next tranche of loan funds. The Greek government said that it would buy back debts in a Dutch action, and private holders of Greek debt have until Friday to register their interest in participating in the bond buying programme. The shared currency is also expected to draw support after Spain requested for a bank bailout to recapitalize its banks: Bankia, Catalunya Bank, NCG Banco and Banco de Valencia. Analysts believe that the common currency would further rise if Spain asks for a government bailout. The recent Chinese data also supported risk sentiment as manufacturing activity in November grew for the first time in 13 months in November, improving the outlook for the global economy.
In the US, talks to avert a fiscal cliff stalled as the Democrats and Republicans could not seem to agree on increasing taxes on the wealthy. US lawmakers are left with little time before their country hits the fiscal cliff, and the continued want of progress is likely to force the world’s largest economy into another recession. With better news from Greece, Spain and China, the Euro is expected to rise versus the Dollar. Thus, a long position is recommended for the EURUSD pair in the European exchanges today.
