Investor risk appetite retreated midday Friday after the euro hit a morning high of $1.4309.
Sentiment was positive and saw a rise in the euro, as confidence returned to the markets after Greece’s government announced an agreement with the IMF and EU on a five-year austerity plan, which cleared the way to unlock the second bailout programme for the debt-burdened country. As previous concerns on a Greek debt default and the consequences of a likely spill-over effect on other troubled economies in the EU eased, the US dollar sell-off this morning was short-lived.
Rumours of Italian banks failing the latest round of EU stress tests this morning, and news of some of the largest Italian banks such as Unicredit and Intesa being suspended from trading, hit the euro hard and saw it plunge to its midday low of $1.4192. Greek PASOK lawmaker Thomas Robopoulos’ announcement that he may vote against the new austerity plan in next week’s key parliamentary vote further reined in any gains the euro made in early morning trade. Upon the release of US durable goods orders and personal consumption data, which were in line with economists’ expectations, the US dollar experienced some volatility but was overshadowed by news on Italian banks and the Greek debt crisis. At 2.10pm (London time) the pair was trading 0.25% lower higher at $1.4225.