EU Morning Report- Euro jumps on EU summit deal

The euro (EUR) rallied to 1.2627 from 1.2407 today against the US dollar following the EU summit. EU leaders agreed to spend 120 billion euro to stimulate growth and create new jobs. It was also agreed to emergency action to lower the borrowing costs of Italy and Spain stabilizing the bond markets without the need for the countries to adopt additional austerity measures. The leaders also decided that the European Stability Mechanism (ESM) would be able to lend directly to the banks without increasing a country’s budget deficit further improving sentiment in the market. But the euro may be under pressure after the initial euphoria from the summit fades and as investors are following on tomorrow’s Chinese manufacturing figures. Eurozone Consumer Price Index is due today.

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