According to a government advisor, quoted on Reuters. EUR/USD is rallying on short-covering and a dip in risk aversion as hopes for a US bank bailout grow. EUR/USD trades at 1.3850 and EUR/JPY at 146.50.
Details are unclear, but it sounds as though Iceland is trying to stabilize things via the currency markets. EUR/ISK reached record levels offshore today after the market froze domestically.
Update: Here’s Bloomberg’s take.
