Euro and US Futures Rise after Sarkozy and Merkel Pledge help

October 10 00:00 2011

New York, October 10 (RainbowNewsLine.com) – German Chancellor Angela Merkel and French President Nikolas Sarkozy held a meeting and pledged to do whatever is necessary to bolster banks, settle the Greek debt crisis and help Europe to grow. Apart from a gentle boost to risk sentiment, there were hardly any details available. However, as a result of the EU pledge that a new comprehensive plan to recapitalize euro zone banks will be in place by the end of the month and the short-coverings, the euro rose on Monday.

Investors were cautious because details were not available and because of the poor track record of EU leaders who have not delivered even after promising many times to resolve the debt crisis. Todd Elmer, currency strategist at Citi in Singapore, said in a research note that “The positive response could simply reflect the fact that positioning is now more balanced following earlier risk reduction,” and added that “It looks unlikely that EUR gains can be sustained absent further positive developments.”

Euro rose 0.7 percent to $1.3475, coming out of a nine-month low of $1.3145 last week on trading platform EBS. The single currency’s rise gained steam after it breached hourly resistance at $1.3423. US stock futures also rose.

The euro can get much-needed relief if concrete steps to recapitalize euro zone banks are put in place.

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