News that German Finance Minister Steinbrueck is close to coming up with a plan to clean up German banks’ balance sheets and news that the European Commission is close to rubber stamping Germany’s rescue plan for Commerzbank will be giving the euro some much needed support.
Worry over the health of the global banking system is one of the main drivers of heigthened risk aversion which weakens the euro, and these developments will help allay some of that fear, albeit only marginally so.
Obviously the specific woes of Commerzbank are a particular negative hanging over the euro. News that help is on the way will be supportive of the currency.
