The Euro sustained the biggest weekly advance against the U.S. Dollar since February as regional leaders and policy makers vowed to formulate a viable plan to preserve the Euro currency. Meanwhile, Spanish bonds rose while yields dropped the most in seven months on speculation the European Central Bank will step up efforts to stem the ongoing debt crisis. Italy’s securities also gained subsequent to statements by German Chancellor Angela Merkel and French President Francois Hollande indicating they’re willingness to work towards keeping the shared currency intact. Further comments by ECB President Mario Draghi suggesting the central bank will do whatever is necessary to solve the financial problems ailing the region, continued to support the Euro’s strength.
In other news, the U.S. Dollar weakened versus the majority of its money currency counterparts following the release of government data which showed that the U.S. economy slowed down in the second quarter. However, those who trade Forex believe the Fed won’t implement another round of quantitative easing at this time as GDP reports showed the economy expanded by 1.5%. The greenback declined in anticipation of this week’s Federal Reserve meeting but gained against Japan’s Yen as figures showed that growth in the U.S. economy slowed less than expected.
The Canadian Dollar rallied for a third consecutive week against its American peer on optimism the European Central Bank will take action in order to boost economic growth –a factor that boosted risk appetite in the markets. The Loonie remained strong on forecasts the upcoming release of Canada’s GDP will show that the economy expanded by 0.2 %.