Early Asian trading highlighted the growing investor fears that the crisis in the Eurozone is spreading from Greece to Spain. Europe, being a key export market for Asian manufacturers, remained the focus, as it has done for most of the week, and saw Asian stocks suffer at the thought of losing that key export markets growth. Hong Kong’s Hang Seng Index fell 1.32%, Australia’s S&P/ASX200 was down 1.04%, whilst Japan’s Nikkei 225 Index fell nearly 2% before rebounding to being 1.34% down. Topping the list of concerns was the fact that yields in the Spanish debt auctions have increased to nearly 7% in recent sessions and remain high, whilst borrowing costs in Italian auctions increased too. Over in Greece, new polls suggest the left wing Syriza political party is gaining ground ahead of June 17 elections, on the back of opposing austerity measures attached to bailout funding.
Speaking of bail out funding – providing a much needed boost to the beleaguered Euro was the European Commission proposing that the money set aside for aiding governments should be used to bail out ailing banks directly. The EU commission also pushed for more integration through a euro-wide “banking union” and a single deposit protection scheme to protect savers. After hitting 22 month lows against the USD, the EUR/USD was up 0.18%, valued at 1.2389.
The largest fall in the currency markets was seen in the USD/JPY pairing, down 0.38%, trading at 78.76. This was mainly due to the National Association of Realtors in the US reporting that pending home sales fell 5.5% in April, well beyond expectations for a 0.1% decline.
Today promises to be another big day for the Euro as unemployment data in Germany is released, Italian Consumer price index and French consumer spending. The monthly figures from France are expected to remain in the minus at -0.7% but still be an improvement from the previous 2.9%.
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