At the end of last week, Spain, which represents 11% of the total output of the Eurozone conducted worse than expected bond auctions seeing the yield on its 10-year bonds reach 5.99%, rising from 5.74%. Rising yields mean increased borrowing costs and are adding to concerns that Spain is becoming increasingly dependent on ECB emergency loans. To highlight the chasm in fortunes, German auctions on 10 year bonds produced a yield of only 1.72%. As storm clouds appear over Spain, investors once again showed their lack of faith in the Euro, which up and till Friday of last week, enjoyed a relative calm. Unemployment is at record levels in Spain with the 16- 24 year old unemployment rate standing at 48%. Two weeks ago Prime Minister Mariano Rajoy agreed with the European Commission to cut Spain’s GDP deficit from 8.5% to 5.3% in 2012, and made 27bn Euro’s worth of cuts in the budget. However, investor concern over Spain meant a fall in the Euro – dropping against most major currencies as the US Dollar once again found favour as a safe haven. The EUR/USD was down 0.57% at time of writing, trading at 1.3002, whilst the USD enjoyed gains as the trading week begun. The US Dollar Index, which measures the greenback against a basked of six weighted currencies was up 0.32%, valued at 80.30.
The rising USD meant there were further losses in the commodities markets, continuing where they left off on Friday. Gold was down 0.86%, valued at 1645.95 whilst Silver was down 0.49%, trading at 31.237.
Today should be a busy day for the USD – at 1.30pmGMT MoM retail sales figures are released in the US as well as Core Retail sales figures. Both are expected to down so any deviation in the expectations should result in increased volatility for Binary traders today.
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