Spain

Euro still on the defensive

A steady drip-drip of bad news has weighed on an already vulnerable euro this morning, the single currency sliding to a fresh two month low of 1.2720. Spanish bond yields are up another 10bp today, partially in response to a story suggesting that the government is very unlikely to apply for aid this year (most of us had already surmised this much). In addition, bad loans in Italy rose by 15.3% in the year ended September, a reminder of the continuing carnage on Italian bank balance sheets.
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08/11/2012 @ 10:49 GMT

Sterling and Spain

As the euro has suffered so far this week, sterling has not been very far behind, with both the fundamental and technical factors proving to be less favourable towards the currency. As the Bank of England prepares for its policy meeting (announcement this Thursday), it finds itself somewhat trapped by recent events. Yes, GDP has recovered, but stripping out the many distortions from holidays and the Olympics, then the economy is growing only modestly and by a margin that could easily be revised away in the coming months.
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06/11/2012 @ 11:31 GMT

Spain’s stench sullies the single currency

The single currency continued to retreat over the course of the morning session, not helped by more dreadful news out of the Spanish labour market. Unemployment in Europe’s fourth largest economy rose to an extraordinary 25% last quarter, up from 24.6% in Q2. Rather optimistically, the Labour Minister in Spain declared that the pace of jobs' destruction was slowing. The Spanish Cabinet has approved EUR 4.7bn of loans for two troubled regionals, Valencia and Andalusia (unemployment in the latter is above 35%!). Spanish bond yields continue to climb, the 10yr up another 5bp today at 5.62%.
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26/10/2012 @ 12:06 GMT

Spain Wobbles

Data/Event Risks • USD: Little risk from FOMC decision, with focus on any changes to statement, but will be minor. Home sales fell 0.3% MoM in Aug, with 3.2% recovery seen in Sept, but USD more sensitive to labour market data so no major risks unless very weak and details housing recovery perception.
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24/10/2012 @ 07:06 GMT

Spain having it all

Data/Event Risks • ALL: The risk remains of more comments from officials ahead of the EU summit which starts tomorrow. Generally (as always) this is not seen as a game-changing event for the euro. • USD: The housing data (housing starts, building permits) should not be a major risk, this generally having to be very out of line with expectations to impact the dollar.
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17/10/2012 @ 06:53 GMT

Wanting the best of both worlds

Having toyed with the 1.30 level for most of the morning, EUR/USD is now making a break for the hills as the NY session gets underway. The story from this morning emerging from the Spanish press and reported in the Wall Street Journal suggests that Spain is looking to have its cake (or its tarta) and eat it. In other words, the mere opening of a credit line with the European rescue facilities, without necessarily receiving any loans, would be sufficient for market confidence to be boosted, with the nameless official suggesting a further 1.5% could be cut from bond yields.
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16/10/2012 @ 13:18 GMT

Euro bulls still in control

Despite the loss of one big figure since reaching a high on Friday of 1.3072, the euro bulls still appear to be in control of direction. At least from a technical perspective no real damage has been done thus far. The upward sloping trend-line evident since the last week of July continues to be respected, and the single currency remains comfortably above all of the critical moving averages. However, those with a positive disposition towards the euro would be disturbed that it has slipped back under 1.30 so quickly.
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08/10/2012 @ 07:54 GMT

Squaring up

The risks are that we see a choppy end to the week, month and also quarter today, with a lot of flows to be executed to square things up. There are also holidays in China next week. Markets got a taste of this yesterday with EUR/USD trading the session lows and highs within the space of an hour as details of the Spanish budget were announced. In sum, expectations were raised that Spain was paving the way for a bailout in the coming weeks.
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28/09/2012 @ 07:18 GMT

Another huge euro issue - Spanish separatism

Spanish finances remain deeply disturbing, but it is the increasingly vociferous push for separatism in some regions that is even more troubling. Especially unsettling is the latest fracas between Prime Minister Rajoy and the Catalan president Artur Mas. The latter has been pushing hard for greater autonomy over the finances of his region, but this has been flatly rejected by Rajoy as being in violation of the constitution. In response, Mas has now called for early elections, to be held on November 25th, on a platform of greater self-determinism.
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26/09/2012 @ 07:45 GMT

Renewed anxiety

In Europe, a multitude of thorny issues continue to raise their ugly heads. According to Der Speigel, the Greek fiscal shortfall is around EUR 20bn, much higher than original estimates. If this is the case, then last week’s decision by the troika to leave Athens may well reflect more fundamental differences than both sides have admitted to. Separately, Angela Merkel and Francois Hollande apparently failed to narrow their differences over how and when to introduce joint eurozone banking oversight.
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24/09/2012 @ 07:15 GMT

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