Speculation that Eurozone leaders and officials will be able to solve the sovereign debt crisis has moved the euro ahead of the U.S dollar. A currency exchange traded fund, CurrencyShares Euro Trust (NYSEArca: FXE), gained nearly 4% last week on the momentum.
European officials have outlined their new bailout plans for Greece, which includes helping out any banks affected by Greece’s insolvency. The G-20 nations have pegged European leaders as responsible for finding a solution to the debt crisis by next week, the Oct.23 deadline and EU Summit.
“The elements of this plan include a much more substantial financial firewall to ensure that the governments of Europe can borrow at sustainable interest rates,” U.S. Treasury Secretary Timothy Geithner told reporters in Paris. [Euro ETFs Jump on Bank Recapitalization Hopes]
The euro has rallied the most against the U.S. dollar in more than two years on hope that the political leaders can solve the region’s debt crisis. The euro posted its largest weekly gain since March 2009, reports Bloomberg Businessweek.
“Markets are feeling more positive about the European leaders coming up with a comprehensive solution,” Vassili Serebriakov, a currency strategist at Wells Fargo & Co. in New York, said. “The numbers still point to ongoing growth in the global economy and most importantly, the U.S. It looks like a classic return of risk appetite.”