Singapore dollar rallies with risk assets 'back in vogue'

The measures put forward by the EU seem to be welcomed by investors, says IG Markets Singapore, with the Singapore dollar trading at $1.2676.

IG Markets Singapore said:

The Singapore dollar has rallied against the Greenback as risk assets are back in vogue following a productive EU summit on Friday.

The measures put forward by the EU seem to be welcomed by investors and tackle the issues of recapitalizing banks while protection private bondholders.

Global equities rallied the most this year while US oil prices rocketed almost 10%.

Risk currencies have also risen on this upbeat mood with the Singapore dollar trading at $1.2676 this morning.

Before the outcome of the EU summit on Friday morning the local currency was trading up at $1.28.
Only time will tell if the Singapore dollar can hold onto these gains as market sentiment improves.

RBS meanwhile noted (for 29 June 2012 trading):

The decision by the European leaders at the June 28-29 summit to directly recapitalize their own troubled banks was well-received by market participants.

The market reaction was unlike that following the earlier request for aid by Spain on behalf of its banking sector because European leaders addressed two of the key concerns surrounding the earlier Spanish request – they agreed to direct bank recapitalizations without increasing government debt and without the issue of seniority between rescue funds and existing bond holders.

European sovereign bond yields declined and EUR/USD rose above 1.2650 after news of this decision hit the wires. Risk oriented assets across the board surged to close out the quarter while the USD closed near the lows of the day vs. most G10 currencies, with the JPY being the notable exception.