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Big Gain For The Euro, New Rally Forthcoming?

Mainly because of the news release about the plan that Merkel and Sarkozy are working on, the Euro rose almost 2 percent against the USD on Monday and is showing signs of an extended rally. It is currently reading at the highest level it has been in the last few weeks and it isn’t showing any signs of slowing down anytime soon.

There were also some very strong pieces of economic data that were released by both Italy and France as well as positive information coming out of Greece in regards to the visiting troika of inspectors. It seems as though things may be starting to turn around – it is too early to be overly optimistic, but things don’t seem to be getting much worse.

This really just goes to show everyone that when progress is made, there will be a ripple effect and everything will start looking up. Now, all we have to do is hope that the plan that France and Germany deliver before the end of the month is more than suitable and is widely accepted by other EU nations. If all this optimism is destroyed by a lackluster plan that doesn’t really address any of the issues in an effective manner, we could be in for another big drop.

 

US Markets React Positively To Progress In EU

On Monday, US markets continued to rally and were up over 3%. There were a variety of reasons for this, but most people are pointing to the progress being made when it comes to the EU debt crisis and the new plan that France and Germany are going to present soon.

In general, most financial instruments are trading at way below their value – almost every market is oversold and there are finally some good buying opportunities for eagle eyed investors. While earnings season may cause this progress to slow or even reverse, any progress in a positive direction is good progress.

Another factor that has instilled confidence in investors all around the world, not just the US, is the situation with the failed lender Dexia. Normally, this would be a bad thing – when a huge lender like this goes down, people usually get nervous. But, the quick and decisive action by the appropriate governments and the potential nationalization of this company shows investors that even after all the trouble, government help is still available and that they will not let big companies like this fail very easily.

 

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