Euro gains on dollar

For a second session in a row, the euro went up versus the dollar in thin trading on Monday, driven by renewed hope that the European Central Bank will buy binds to reduce Italy and Spain’s borrowing costs.

It is now the single currency’s best two-day gain versus the greenback on over nine months. Earlier today, it also climbed to a one-month high against the dollar. In the European session, trading was “choppy”, but that changed in the New York session, with the common currency performing strongly.

Midday trading saw the euro 0.2 per cent up on the greenback to $1.2414, falling from a high of $1.2443 recorded in Asian trading. The currency’s gains over the past two days are now at almost two per cent, its strongest two-day performance since October last year.

Barclays Capital’s Aroop Chatterjee said that investors are more optimistic about the situation in the euro zone and expect that the ECB plan to step in to assist indebted countries will be a positive move.

However, doubts remained about the proposed plan and many are of the opinion that the bloc will have to endure further pain before the crisis has been resolved. This meant that a number of investors opted to hedge bets that the single currency’s gains would be short lived.