Coordinated Rescue Plan in Europe
Following an announcement of a coordinated European bank rescue plan the Euro rose against the Dollar. It is thought by some economists that the European rescue plans have reduced the dollar’s attractiveness as a safe haven. Since mid September the Euro had fallen against the dollar and now that credit markets are beginning to function again Forex traders are more confident of the Euro. A stronger Euro could provide investors with Many Forex opportunities.
US Injects $250 Billion Into Banks
On Tuesday two events gave investors more confidence in both stock and currency markets. The first was the US plan to buy $250 billion dollars worth of interest in major banks. It is hoped the additional capital will unfreeze credit markets and help businesses to obtain short term loans necessary for day to day expenses. Treasury Secretary Paulson noted that it is now up to these banks to resume normal lending practices in an effort to stimulate the economy. The success of the plan is dependent on banks resuming normal lending and a failure to do so would cause the plan to collapse.
Lower LIBOR Rates
Traders also received good news from the London Interbank Offered Rate in the form of substantially lowered rates that indicate the acceptance by the London banking community of global bailout plans. Again the successes of the bailout plans depend on banks resuming normal lending practices.
