Posts Tagged ‘spain’

In the latest round of online Forex trading news, most eyes are now focused on the federal government of the United States and the quantitative easing that the policymakers will take during the first months of 2014.

This is a direct result of the fact that Europe will remain comparatively quiet this month. So, traders will be looking to see if they can take advantage of what many feel will be a strengthening of the dollar in the weeks ahead.
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In the latest forex trading news, all eyes are keenly focused on what may be a rather bullish rebound for the Euro.

Last week, this multinational currency finished trading with gains just above one percent; a mild signal that forex traders may be taking a keener eye on futures. However, there were relatively few notable events during the prior week. On the contrary, the week ahead will see some major news emerge from the markets.
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This week’s online Forex trading news has been highlighted primarily by the fiscal conditions currently underpinning the Eurozone, with a moderate consideration regarding investors’ stances on the US dollar.

While the primary concern is the United States government’s approach to the looming deficit cliff, the Federal Reserve seems to have made progress towards the latter part of the week which will help bridge the gap between the democrats and republicans. However, in Europe near term worries continue to daunt any real gains in the value of the Euro.
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All eyes will be on the Eurozone this week as a welter of news upturns expectations in the run up to Thursday’s EU Summit in Brussels. Spain in particular is breathing a little easier today, following Moody’s decision not to downgrade its credit rating to ‘junk’ status.

The country’s debt remains in the investment grade, though by the slimmest of margins. Moody’s reaffirmed their Baa3 rating with a negative outlook, citing progress on economic reforms and bank restructuring domestically, and continued ECB bond-buying for the Euro periphery.
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The Spanish Government is facing hard decisions in light of today’s action by credit agency Standard & Poor to cut the country’s rating. As the Spanish crisis deepens online forex traders need to evaluate Spain’s future in the Euro Zone.

For Spain’s politicians the hardest question is whether to ask for financial assistance to lower its borrowing costs. Applying for sovereign aid is perceived as an act of financial desperation and in recent months the Spanish Government has been keen to refute rumours that it was seeking such support. However in its report S&P linked the Spanish government’s unwillingness to seek aid with its decision to cut the country’s rating.
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Dominating Forex trading news is the Euro’s continued decline versus the dollar. The new low of 1.229 has hit many traders and this trend is predicted to continue for some time. The faltering of the Euro is seen to have been partially caused by fresh Greek unemployment figures, this data now showing that the number of jobless youths in Greece has hit a record high.
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The week ahead looks to highlight concerns underpinning the European sovereign debt situation. The main story still is that of volatility on the European market; the single currency’s future viability questioned by many traders worldwide.

Spain is becoming more and more of a concern

The concerns with Spain’s ability to manage a flailing economy have grown since the IMF rescue package was approved. Spanish yields have tipped well over seven percent, trading at 7.39% after hitting a European-era high of 7.56%. Attempting to mitigate further volatility, Spain has banned short selling for three months while Italy, feeling the effects as well has banned short selling financials for one week. There are now fears that Spain may indeed seek a full bailout, as regional governments have begun to express concern for their ability to manage internal debts. Spanish and Italian bank shares were the worst hit followed closely by their domestic indices; the Ibex at one point dropping nearly five percent.

Greece’s debt reduction

Furthermore, creditors are expected to begin auditing Greece’s progress on debt reduction. This audit determines whether the country is to be approved for an additional 31.5 billion euros. With political and social unease, a quickly shrinking economy and many investors questioning whether Greece will meet its August deadline, there has been speculation of true insolvency should their financial situation worsen.

EUR/USD at two-year low

Because of these protracted jitters, the euro has fallen to a two-year low against the US dollar to trade at $1.2082. Furthermore, it has fallen to an eleven-year low to the Japanese yen. Below $1.20, many online Forex traders have taken a bearish stance.

Euros long term survival

On the other hand, some Forex traders have taken the attitude that any position would have to be long due to such market volatility. This, of course, is under the assumption that the euro will remain in its current form. Indeed, the lack of real movement in the precious metals markets, traditional safe havens, illustrates that many believe the markets may incur still more losses in the near term. Nonetheless, taking a long position in the euro may indeed be one of the few hedges against what remains as the most volatile era for decades.

In recent Forex trading news, it is clear that all eyes continue to be on the economies of both Spain and Italy. Although the ECB’s intervention into the Spanish sovereign debt crisis initially raised investor sentiment, a subsequent backslide occurred, causing Spanish bond rates to hover near the dangerously high level of 7 percent. If we combine this factor with Spain’s request to be given more time to reach its deficit targets in exchange for further domestic austerity measures, (more…)

The German Unemployment Report is expected to support the bleak outlook for the Eurozone as unemployment in the area’s largest economy is forecasted to increase in June. Undoubtedly, the forecast for the Eurozone is not a rosy one, especially considering Greece is expecting a 9% contraction of their (more…)