The hedge funds and other investors set a new record having bought an unprecedented amount of euros for 8 bln. US dollars on the Chicago Stock within a January 11-18 week. This revealed the confidence of European leaders in their ability to settle the debt crisis.
Last week the total bet on the euro plunging against the US dollar amounted to 7.4 bln. US dollars. Such an abrupt sentiment shift may well be related to Europe being ready to undertake more drastic counter-crisis measures.
The politicians of the whole continent are determined to extend the fund of assisting the countries in a financially challenging situation. For the moment the fund comprises 440 bln. euros. Moreover, a positive reaction might have been driven by China and Japan contributing to the effort made by the EU. These two countries share 3.5 trillion US dollars.
The euro rate on the global foreign exchange market for the week mentioned above spiked by 4% to USD 1.34 from USD 1.29. The growth retained from January 18 onwards, thus the European currency reached a two-month high of USD 1.36.
In 2010 the euro was paring earlier gains owing to a number of eurozone countries being under a threat of a debt crisis. In order to prevent the state or finance system from bankruptcy, Greece and Ireland were induced to borrow about 200 bln. euros from the EU and IMF. Portugal and Spain are also likely to need financial aid in future.