Euro extends gains after historic acquisition deal of Credit Suisse

Euro rose in European trade for the third straight session against dollar amid cautious optimism in the markets following the historic acquisition deal of Credit Suisse.

Global Central Bank are moving to reassure markets, and announced shared measures to bolster liquidity and protect the global banking system.

EUR/USD rose 0.25% to 1.0690, with a session-low at 1.0642, after rising 0.5% on Friday, the second profit in a row as the banking sector calmed down.

Euro rallied 0.25% last week against dollar, the third weekly profit in a row as the European Central Bank kept raising interest rates and closing the gap with the Federal Reserve.

Historic Acquisition 

In the largest bank acquisition since 2008, UBS Bank agreed to buy Credit Suisse with Swiss government mediation to contain the confidence crisis developing currently in the global banking sector.

UBS will pay 3 billion francs for Credit Suisse in a complete deal that includes extensive government guarantees.

The price is less than half of Credit Suisse's value at  7.4 billion franks, with the Swiss National Nank supporting UBS with a 100 billion francs of liquidity, while the Swiss government granted guarantees valued at 9 billion franks for potential losses from the assets in the deal.

Global Central Bank

During the weekend, the Federal Reserve, European Central Bank, Bank of England, Swiss National Bank, Bank of Canada, and Bank of Japan announced combined measures to bolster liquidity in the market.

European Rates

Economists believe that ECB's recent 0.5% rate hike last week is aimed at maintaining credibility and indicates the banking crisis will likely be short termed. 

HSBC expected the ECB to continue hiking rates two times by 25 basis points in May and June, down from previous forecasts for a 0.5% hike.

Goldman Sachs believes the ECB remains in a tightening position despite market volatility.