The U.S. Dollar finished lower against all major currencies as trader demand for risk helped to pressure the Greenback. The weakness in the Dollar was attributed to optimism in the Euro Zone over the potential positive impact of the new European Union and International Monetary Fund bailout proposal for Greece. Throughout the day, the major theme was demand for risky assets as equities, gold and crude oil posted strong gains, supporting the commodity-linked currencies.
The EUR USD closed up for the second consecutive day as weak shorts continued to cover their positions in response to last week’s EU/IMF Greece bailout agreement. The new plan is designed to help Greece should it be unable to find financing in the capital markets. The proposal amounts to a pledge to help Greece out of the Euro Region’s biggest deficit if it runs out of traditional financing options.
On Monday, Greece issued new 7-year financing priced in Euros. This $7 billion offering was the first test as to how investors perceive the viability of the aforementioned bailout plan. According to reports, the bond issue went off without a hitch although the Greek government paid about a 3.10 basis point premium to complete the sale. The relative ease of the bond issue helped relax tensions allowing the Euro to remain firm throughout the day