EURUSD Higher After EU Summit Deal

The EURUSD has rallied around 1.07% this morning on increased risk appetite and dwindling demand for safe haven currencies; this comes after EU leaders agreed to utilise  the Eurozone’s bailout fund in order to to support struggling banks and lessen the burden on sovereign debt.  The statement resulting from the EU summit advised that the “ESM could, following a regular decision, have the possibility to recapitalize banks directly”.  These plans may be finalised as early as July.  The 17-nation common currency is trading around 1.2600 after a prolonged consolidation phase this week. The UK FTSE 100 opened up over 1% higher and the DAX rose around 2.5% on the news.

Germany looks to have eased it’s stance on lending to its troubled neighbours and demands coming from  Italy and Spain for immediate eurozone aid however, Chancellor Angela Merkel will be pleased that Brussels is looking have further control over other eurozone countries financial policies. 

The new package includes the following:

• A 10bn-euro increase in available capital for the European Investment Bank, which could raise the overall lending facility by around 60bn euros.
• Utilisation of available funds to assist smaller enterprises and boost youth employment
• EU project bonds are to be piloted which is worth 4.5bn euros and will be geared towards infrastructure improvements, including energy, broadband and transport.