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Forex - EUR/USD dips as clouds build on Spain's financial horizon

Published 09/18/2012, 08:02 PM
Updated 09/18/2012, 08:03 PM
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Investing.com - The euro slipped against the dollar on Wednesday as investors sold the single currency on uncertainty as to whether Spain will request financial aid and give the European Central Bank the green light to buy the country's sovereign debt and lower borrowing costs there.

In Asian trading on Wednesday, EUR/USD was trading down 0.01% at 1.3047, also a session low, and off from a high of 1.3049.

The pair was likely to find support at 1.3030, Tuesday's low, and resistance at 1.3172, Monday's high.

Reuters reported earlier that Spanish Prime Minister Mariano Rajoy is in no hurry to decide on asking for assistance from the European Central Bank and seek aid via Europe's new bond-purchasing program.

The program would allow the European Central Bank to buy Spanish debt in the open market, though the country would have to formally request assistance to qualify, which could come with painful austerity measures attached.

Spain's Deputy Prime Minister on Tuesday said Madrid was still considering bailouts and possible conditions.

Elsewhere in Spain, the government sold EUR3.56 billion in 12-month government bills at an average yield of 2.835%, down from 3.070% at a previous auction. The Spanish Treasury also sold EUR1.02 billion worth of 18-month bonds, at a yield of 3.072%, down from 3.335%.

Spanish uncertainty eclipsed otherwise positive data out of Germany.

The ZEW Centre for Economic Research's index of economic sentiment for Germany came in better than expected in September, ticking up to -18.2 from a reading of -25.5 the previous month.  

The ZEW index of economic sentiment for the eurozone improved to -3.8 in September from -21.2 the previous month, beating expectations for a reading of -16.5.

While Spanish concerns served as the market's chief steering current, news out of the U.S. supported the greenback.

In the U.S., official data showed the current account deficit narrowed more than expected in the second quarter, falling to USD117.4 billion from a deficit of USD133.6 billion in the previous quarter.

Analysts were expecting a USD125.5 billion deficit.

A separate report showed that U.S. net purchases of long-term assets rose to USD67.0 billion in July from USD9.3 billion in June, beating expectations for an increase to USD45.3 billion.

The euro, meanwhile, was up against the pound and down against the yen, with EUR/GBP trading up 0.01% at 0.8032, and EUR/JPY trading down 0.08% at 102.76.








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