Yesterday there were fears that the cost of borrowing in Spain increased above 6%, raising fears that a bailout could be placed soon. Even though Spain sold more than €3Billion, the cost of borrowing for the country almost doubled to 2.46% for 2 year bonds. A big test remains as Spain prepares for a 10 year bond auction tomorrow. The current yields are 5.89%.
ZEW index of German economic sentiment rose for the fifth consecutive month despite expectations, which meant that there was support for the euro and a rally in stock markets. Italy is delaying its plan to balance the budget in 2013 by a year due to a weakening economic outlook. This is according to a draft document due to be approved by the cabinet of Prime Minister Mario Monti today.
There is shocking news in the UK as Inflation came in at 3.5%, which is likely to result in consumers’ spending tightening. The underlying factors are driven by higher food costs and cost of clothing.
International Monetary Fund (IMF) sees the global economy expanding 3.5% in 2012 from 3.3%, but is still concerned about the fragile recovery surrounding the Eurozone crisis.
US Housing start-ups dropped 5.8% to a five month low, which showed a lack of confidence in the previously sustained industry, indicating that recovery will still take some time. On a good note, US jobless claims are expected to drop by 10K today, showing further sings of improvements in the labour market.
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