The Euro advanced against the U.S. Dollar after the Euro-zone’s Finance Ministers agreed to expand the anti-debt crisis firewall, thereby easing investors’ concerns. The region is now counting on the money pledged up to this point, plus a one trillion Euro cash injection from the central bank, in order to persuade the world that it’s doing everything possible to stem the two-year old debt crisis. Spain released its budget and announced it will raise taxes and reduce spending in order to achieve a 27 billion Euro reduction of the deficit.
The U.S. currency fell against the majority of its money market counterparts as stocks and commodities rose, thereby boosting demand for high-risk assets. Confirmation that the ceiling on the bailout fund was raised helped support market sentiment and prompted investors to move away from safe havens. In the U.S., reports showed that Americans spent more as improvement in the employment sector boosted confidence, signaling that the biggest economy in the world is recovering. Figures from the Commerce Department confirmed that purchases climbed 0.8 percent in February.
Other foreign currency news indicated that the Australian Dollar gained versus the greenback after a release revealed that improvements in the country’s economy eased concerns that a slowdown of China’s economic growth will dampen demand for Aussie exports. The Australian currency soared from a two-month low on data reflecting that new homes sales and bank loans increased. The New Zealand Dollar also advanced after stocks erased prior losses, thereby fueling appetite for growth-related exchange currencies.