Euro Finds Support from Political Efforts

Euro is finding some support today, and the financial markets are finding a little bit of risk appetite, as eurozone politics take center stage. The unlikely support comes as Irish officials try to sway voters to accept the European Union‘s fiscal treaty, and as Germany continues to insist on austerity measures for embattled eurozone countries.

Many had expected some of this upheaval to weigh on the euro. April was the euro’s worst month against the US dollar since December 2011, and the implied euro volumes at the end of the day yesterday were near four-year lows. Yet today, the euro is gaining ground, eking out gains against the greenback.
As this happens, political speculation is alive and well in the eurozone. The EU’s fiscal treaty, suggested last year, is up for a vote in Ireland. The Irish government, however, is making a big push to encourage its citizens to vote on behalf of the treaty during a referendum to be held on May 31. The treaty aims to reign in fiscal policy across all signatory countries — including those not currently using the euro. (Great Britain and the Czech Republic refuse to accept the treaty.)
At the same time, French president Nicolas Sarkozy is facing possible loss in a runoff election, and Germany continues to call for austerity.
At 13:21 GMT EUR/USD is up to 1.3273 from the open at 1.3239. EUR/GBP is up to 0.8174 from the open at 0.8155.

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