China has bailed out Europe again. This time China is buying Portuguese bonds at auction next week.
According to FT, Asian investors including the Chinese government are expected to represent a strong proportion of the buyers of Portuguese bail-out bonds when the Eurozone's rescue fund begins auctioning them next week.
Klaus Regling, chief executive of the European financial stability facility (EFSF), told reporters on Wednesday that Beijing was clearly interested in the Portuguese auctions and that he expected China to participate.
We saw the EUR/USD rally 100pips off this news to 1.42.
Even with this positive news, the question still lingers, What about Greece?
Can big brother come up with a solution for Greece's woes?
Back when the EURO fell to a low of 1.19 versus US dollar in June of 2010, speculation was that China would come out blazing and buy the EURO in heavy loads. We know what happened next, a month later and the EUR/USD was 700pips higher at 1.26.
Then in December 2010 China wrapped its arms around the world and said we will bail out debt-ridden nations in the Eurozone specifically buying Portuguese bonds and Greek bonds. At that time the EUR/USD was at 1.30 and it precipitously found its way to 1.39 by February of 2011. What can we expect now: we will have to wait for a solution to Greece sovereign debt crisis but don't be surprised if big brother China comes out and extends its arms...?