Market Overview

Euro Hits Seven Month High Against the Dollar

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The euro traded at 1.32 on Wednesday morning after reaching a seven month high against the dollar on Tuesday. The common currency's strength was attributed to a higher risk appetite in the market as US lawmakers neared a deal on the impending ‘fiscal cliff'.

The fiscal cliff negotiations coupled with increased confidence in the eurozone has given the euro a much needed boost over the past few weeks. The region has been battling a financial crisis for the past three years and many are predicting that 2013 will be the light at the end of the tunnel.

According to Reuters, credit rating agency Standard & Poor's raised Greece's credit rating to B-minus. The improved rating was attributed to Greece's European peers' recent commitment to keeping the country within the eurozone and helping it lower its debt over the next few years.

Eurozone finance ministers signed off on a 49.1 billion euro aid package after Greek lawmakers passed a new budget and completed a successful debt buyback. Although the new aid package has many critics, for the moment it seems to have improved the Greek outlook for the future.

Many have their eyes on Spain as rumors that the country will request a full sovereign bailout in 2013 resurface. The European Union recently urged Spanish Prime Minister Mariano Rajoy to cut back on costs relating to the aging Spanish population as it is forecast to exponentially increase the country's debt ratio over the next ten years.

Bloomberg, reported that although Rajoy has tried to shield pensioners from the austerity measures thus far, he will be forced to make changes to the current pension plans as part of the agreed upon terms from his EU bank bailout.

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