No strong signs of stabilization for the Eurozone

Further concerns in Spain have led to two major regions, Valencia and Catalonia, requiring funds. This caused Euro shares to tumble and the Euro is at a four year low. 

World markets are deeply concerned as the Eurozone is not showing any strong signs of stabilization, with the ten year Spanish government bonds rising to a fresh Euro-era high of 7.55%. Reports highlighted The FTSE Euro first 300 Index of top European shares opened down 0.8 %, led by weaker bank stocks and after losing 1.5% on Friday. The IMF said that the banking sector needed an injection of at least €40 billion to stabilise its finances and protect it against future shocks. Independent audits commissioned by the Spanish government put that figure at up to €62 billion.

The Troika is set to travel to Greece today to discuss the further tranches of their bailout. To date Greece has fallen short of delivering their side of the bargain. An IMF statement suggested that if the lack of austerity continues it will not shy away from withdrawing the bailout completely.  

In the UK we are set for the release of the 2nd quarter GDP figures. If released as expected this would be the third consecutive quarter of decline for the UK economy. The severe UK budget cuts are said to be the cause for the contraction. If the government do not relax the cuts or exercise pro-growth measures we could be in a bad state for a while to come.

The Euro continues to break levels on the downside giving great opportunity for Euro buyers. The USD could well hold its strength as a safe haven however it is not a bad level to hedge at.   

Today’s Fundamentals

12:30 United States Chicago Fed National Activity Index (Jun) – A monthly index designed to gauge overall economic activity and related inflationary pressure. The current figure is set at -0.45.

14:00 European Union EMU Consumer Confidence (Jul) - Consensus predicts an increase to -20.0 from a previous figure of -19.8 which should be negative for the EUR.

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