Sentiments rebounded in financial markets on Wednesday, propelling traders to switch on the risk-seeking mode on optimism that efforts are being made to contain Europe' debt crisis, as the International Monetary Fund planned to raise about 500 billion euros for funding. Stocks rallied and the euro while the dollar dropped versus majors.
If truth be told, Gloomy sentiments were dominating the global scene early Wednesday, as traders were extremely worried about recent talks between the European leaders over restructuring the Greek debt, yet the rattled tone was soon offset by the IMF news and better than forecasted earnings at Goldman Sachs along with a couple of upbeat economic reports from the U.S economy.
The IMP said today it plans to expand its lending capacity by $600 billion from the current $380 billion to $1 trillion, including $200 billion that was previously pledged by European governments, to protect the global economy from negative consequences of the European debt crisis, according to an official at a group of 20 nation. G20 discussions will resume talks at a meeting in Mexico City Thursday and Friday.
Among those reports which helped lift markets on Wednesday, figures from the U.S Department of Commerce showed today that wholesale prices were held in check in December, consistent with the Federal Reserve's inflation outlook, while homebuilder sentiments improved in the U.S by the strongest pace since June 2007, according to the NAHB/Wells Fargo housing market index.
Meanwhile, the dollar dropped against its peers Wednesday, sending the index, which measures the performance of the U.S dollar against a basket of currencies including the euro, the pound and the Japanese Yen, down from the opening level of 80.94 to trade around 80.57, recording the highest level at 81.21 while lowest at 80.49.
On the other hand, gold surged for the third consecutive day to trade around $1659.44 an ounce, from the opening level of $1654.35, on the other hand, oil prices pared earlier gain and currently trades around $100.40 a barrel from the opening levels of $101.27.
The euro rose against the dollar following the IMF News, sending the EUR/USD pair to trade up around $1.2849 from the opening level of $1.2746, while recording the highest level of $1.2864 and lowest level of $1.2734.
The British Pound rose against the dollar as well, driving the GBP/USD pair to trade around $1.5428, from the opening level of $1.5321, while recording the highest level of $1.5437 and lowest of $1.5327.
Finally, the Dollar rose steadied against the Japanese Yen, as the USD/JPY pair trades around ¥76.80 from the opening level of ¥76.82, while recording the highest level of ¥76.87 and lowest levels of ¥76.65.