ECB Publishes Monthly Report, Spain Auctions 3 Billion Euros in 15 Year Bonds
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EUR/USD: The European Central bank published its monthly budget today in which the governing council made the decision to keep its key overnight lending rate near zero. The central bank said that current rates remain appropriate, and went onto add that “inflationary pressures over the medium term remain contained as suggested by weak money and credit growth.” While GDP has expanded during the first half of the year, we may see economic activity weaken over the coming months as governments scale back stimulus measures to battle their ballooning budget deficits. Meanwhile, during the European trade, Spain auctioned 3.8 billion dollars (3 billion euros) in 15 year notes at an average yield of 5.11 percent. As of late, Spanish banks have borrowed a record 126.3 billion euros from the European Central bank in June, which is up from 85.6 billion in May. However, it is noteworthy that southern European countries have not sold bonds publicity in the past 2 months. Markets will keep a close eye out for the ECB stress tests measures which are expected to be released next week, July the 23rd, while the central bank head, Jean Claude Trichet is rumored to meet with banks 2 days prior to the results. The meeting is expected to discuss the results and consequences of publicizing the outcomes. To discuss this and other topics, please visit the EUR/USD forum.
Written by Michael Wright, Currency Analyst
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