The U.S. Dollar reached a one-year high against a basket of major currencies following the passage of the $700 billion bailout plan which was approved by the U.S. Senate. The Euro slipped slightly ahead of the decision by the European Central Bank on interest rates.
The thrust of the financial rescue plan is that the U.S. government will acquire the toxic assets from the financial institutions. While this plan has been approved by the U.S. Senate, the House of Representatives will be voting on this rescue plan again later this week; it was vetoed by the House earlier in the week.
Although U.S. House Representative, Barney Frank, the Chairman of the House Financial Services Committee told the media that the bill was “likely” to pass in the House (of Representatives), the outcome was uncertain, nonetheless. The U.S. House of Representatives will likely cast their vote on Friday.
As far as the Euro is concerned, international investors are anxious to see whether or not the European Commercial Bank will shift to a more dovish stance, given the recent economic signs including easing inflation and increasing risk to global economic growth as a result of recent financial turmoil. The ECB is expected to keep interest rates stable at 4.25%.
The Euro dropped .8% to $1.3907 after having reached a session low, $1.3856, last seen more than a year ago.