On the fundamental front, during the European session this Thursday, Spain will have its second government bond auction of the week and its’ 10-Yr auction will be considered a kind of litmus test for Spain’s risk appetite and, thus, the euro’s.
On Monday, borrowing costs on 10-year Spanish government bonds traded on the secondary market rose to 6.1 percent before falling slightly to just below 6.0 percent midweek, fueled by fears that Spain could be heading towards a sovereign default amid an “official” Spanish unemployment rate of 24 percent, according to Scott Boyd, writer at OANDA Corporation.
Also, worthy of note, Spain’s annual deficit remains nearly twice the 3.0 percent of GDP mandated by the Eurozone. “Unless Spain can reduce its deficit, while simultaneously keeping yields within a sustainable range, its options are severally limited – appeal to the European Financial Stability Fund (EFSF) for emergency funding, or default,” says Mr. Boyd. "Neither option is particularly appealing."
H1.3129
L 1.3112
S3 : 1.3056
S2 ; 1.3089
S1 : 1.3122
R1 : 1.3133
R2 : 1.3165
R3 : 1.3198
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