UBS is said to take over Credit Suisse in a deal aimed at stemming what was fast becoming a global crisis of confidence.
EUR/USD has started out the day on the bid following the news that Switzerland's UBS has reached a deal to buy struggling rival Credit Suisse after an intense weekend of negotiations. EUR/USD is up 0.2% at the start of trade, reaching a high of 1.0689. The 50 bps move from the European Central Bank on March 16 was accompanied by a risk-on the environment which has been weighing on the US Dollar as investors see the light at the end of the tunnel with respect to the banking crisis. Credit Suisse's chief executive said on Friday the bank was working hard to stem customer outflows and on Sunday UBS is said to take over Credit Suisse in a deal aimed at stemming what was fast becoming a global crisis of confidence.
Credit Suisse, the 167-year-old embattled lender had been brought to the brink of financial calamity last week, despite securing a $54bn credit line from Switzerland's central bank. Meanwhile, European Central Bank supervisors do not expect contagion for euro zone banks from the market turmoil, a source familiar with the content of an ad hoc supervisory board meeting this week told Reuters.
´´In our view prevailing uncertainties suggest that USD strength is unlikely to fade too much in the weeks ahead. We have not made any adjustments to our EUR/USD forecasts due to recent market events,´´ analysts at Rabobank said. ´´We are forecasting EUR/USD at 1.06 on a 1 month and 1.05 in 3 months. We continue to expect the USD to give up some ground later in the year.