News & Analysis at your fingertips.

We use a range of cookies to give you the best possible browsing experience. By continuing to use this website, you agree to our use of cookies.
You can learn more about our cookie policy here, or by following the link at the bottom of any page on our site.

0

Notifications

Notifications below are based on filters which can be adjusted via Economic and Webinar Calendar pages.

Live Webinar

Live Webinar Events

0

Economic Calendar

Economic Calendar Events

0
Free Trading Guides
Subscribe
Please try again
EUR/USD
Bearish
Oil - US Crude
Bearish
Low
High
of clients are net long.
of clients are net short.
Long Short

Note: Low and High figures are for the trading day.

Data provided by
Wall Street
Mixed
Gold
Bullish
GBP/USD
Bearish
USD/JPY
Bullish
More View more
Real Time News
  • Forex Update: As of 17:00, these are your best and worst performers based on the London trading schedule: 🇦🇺AUD: 0.95% 🇨🇦CAD: 0.69% 🇳🇿NZD: 0.58% 🇯🇵JPY: -0.09% 🇪🇺EUR: -0.11% 🇨🇭CHF: -0.56% View the performance of all markets via https://www.dailyfx.com/forex-rates#currencies https://t.co/6y7ipeRMTH
  • interested to see the responses here $Gold https://t.co/NBz8Jyy1qu
  • Gold prices hit a fresh seven-month low last week, eventually finding Fibonacci support. But with US rates in focus for the Fed on 3-16 - what will happen first?
  • https://t.co/mviHFA68q9
  • #Bitcoin, #Gold, #Dollar, $EURUSD, $AUDUSD and $USDCAD Technical Levels - (Webinar Archive) - https://t.co/YozHhSFHxc
  • Indices Update: As of 17:00, these are your best and worst performers based on the London trading schedule: US 500: 2.39% Wall Street: 2.18% FTSE 100: 0.23% Germany 30: 0.17% France 40: 0.09% View the performance of all markets via https://www.dailyfx.com/forex-rates#indices https://t.co/O0R5hSwfSN
  • #Gold attempted to rebound from multi-month lows today, climbing as high as $1,760 before hitting resistance and turning back downwards. The precious metal is now trading back around $1,735. $XAU $GLD https://t.co/QgXRBljgWe
  • Equities have managed to start the new month on the front foot as bond yields are taking a breather from their rapid surge over the last few weeks. DAX 30 bulls aim towards the 14,000 mark. Get your #DAX market update from @HathornSabin here:https://t.co/E7CYIM0KQC https://t.co/bnFyQfXLP6
  • ECB President Lagarde: - Pandemic is still heavily weighing on European economies - ECB will do its job to ensure firms and families can access finances needed to weather the storm - They can do so with confidence that financing conditions will not tighten prematurely #ECB $EUR
  • Heads Up:💶 ECB President Lagarde Speech due at 16:10 GMT (15min) https://www.dailyfx.com/economic-calendar#2021-03-01
Spain: The Crisis Front Some May Have Forgotten

Spain: The Crisis Front Some May Have Forgotten

Yohay Elam, Technical Strategist

Italy is now garnering much of the attention in the Eurozone, but with Spanish debt still mounting despite controversial spending cuts and stimulus measures, a bailout seems increasingly unavoidable.

Spain, the euro-zone’s fourth largest economy, maintains access to the bond markets, but this comes at a price: Spain paid €38.66 billion in interest payments on its debt, and for the first time ever, the nation’s financial costs have exceeded staff costs. This serves as a sobering reminder that without a return to growth that will raise revenue, Spain is unlikely to avoid a bailout.

The commitment of the European Central Bank (ECB) to do “everything to preserve the euro” in July 2012 certainly helped the struggling nation. It contributed to lowering the country’s bond yields in the secondary market, as well as in the primary market.

ECB president Mario Draghi followed up on this commitment by presenting the Outright Monetary Transactions (OMT) program. According to this program, the ECB would buy bonds of troubled countries, provided they took a bailout. The commitment of the ECB served as a bazooka: Investors knew that the ECB was ready to act, and as a result, they felt more confident investing in Spain. And although Spain paid a lower interest rate in consequent bond auctions, this is probably not enough to save the nation from its debt.

Debt Rises Despite Deep Cuts and Tax Hikes

In September, the top rate VAT level rose from 18% to 21% and the medium level rose from 8% to 10%. In addition, services such as movie tickets and haircuts were moved from the lower tax rates to the higher ones.

During 2012, the government of Prime Minister Mariano Rajoy made cuts in health and education, triggering mass protests. The cut in pensions could eventually hurt the unemployed who rely on pensions of their relatives, which would likely force even more citizens to take to the streets. (Read more about Spain’s impending pension problems on Forex Crunch.)

Tax revenues would have been higher if the economy had grown. Yet here also, the data points in the other direction: Spain’s economy contracted by 0.8% in Q4 and by 1.9% year-over-year, according to the most recent data.

However, despite these deep spending cuts, tax increases, and improving market conditions since the summer of 2012, the debt-to-GDP ratio rose well above the government’s target. Spain’s total debt grew by a total of €146 billion, to €882 billion at the end of 2012. The debt-to-GDP ratio is now 84%, still above the 79.8% forecast the government presented in July 2012.

One of the reasons for the growing Spanish debt is transfers to banks. Bankia, which became a symbol of Spain’s banking issues, was nationalized in May 2012 and reported a loss of €19.06 billion that year. Spain received €41.4 billion in aid for its banks, but not for the state itself. Spain did not receive visits from the “troika”—the EU/ECB/IMF coalition—like Greece, Ireland, and Portugal did.

The political stalemate in Italy and the market reaction showed that the Eurozone crisis never really went anywhere. Spain’s borrowing costs were not optimal, and the elections in neighboring Italy have again shown that Spanish bonds are very vulnerable.

As a result of these ongoing factors, Spain could still find itself asking for a bailout in 2013, and this would have an obvious negative impact on the euro and major pairs like EURUSD and others.

By Yohay Elam of Forex Crunch

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.

DISCLOSURES