Dhaka, Bangladesh (BBN) - The Euro (EUR) rallied on Friday as investors bet that European leaders in meetings will move forward in resolving the euro zone's two-year-old debt crisis.
It gained to 1.3893 against the US dollar (USD). The single currency picked up towards a six-week high against the USD on Monday as investors grew confident about the second summit scheduled for Wednesday, a weekly market update said.
However as Tuesday’s cancellation of the meeting of European finance ministers raised doubts whether the summit will result in a clear plan, the EUR dropped to USD 1.3897 and held steady on Wednesday.
The EUR rallied on early Thursday after EU leaders and banks reached a deal on a 50 percent write-down for private bondholders on their Greek debt- making progress in stemming the debt crisis.
It hit a seven-week high, jumping above USD 1.4015. The currency also held up well in Asia, with markets seemingly satisfied for now with the news coming out of the EU summit.
On euro zone debt hopes and talks of the Federal Reserve to take new measures to boost growth, the USD ended hitting a record low against the Japanese Yen (JPY) and one-month low against the Swiss Franc (CHF) on Friday.
On Monday the USD was shunned overall and the dollar index was down, as risk appetite improved by a less pessimistic view on Europe and record third-quarter revenues at Caterpillar Inc (CAT), that have underpinned U.S. stocks. The USD touched a low around 75.70 JPY by Wednesday and settled around 75.89 JPY on early Thursday.
The move in the EUR and other risk currencies also resulted in the dollar index to hit a new seven-week low of 75.868.
BBN/SSR/AD-29Oct11-3:48 pm (BST)