• 673 days Will The ECB Continue To Hike Rates?
  • 673 days Forbes: Aramco Remains Largest Company In The Middle East
  • 675 days Caltech Scientists Succesfully Beam Back Solar Power From Space
  • 1,075 days Could Crypto Overtake Traditional Investment?
  • 1,079 days Americans Still Quitting Jobs At Record Pace
  • 1,081 days FinTech Startups Tapping VC Money for ‘Immigrant Banking’
  • 1,084 days Is The Dollar Too Strong?
  • 1,085 days Big Tech Disappoints Investors on Earnings Calls
  • 1,086 days Fear And Celebration On Twitter as Musk Takes The Reins
  • 1,087 days China Is Quietly Trying To Distance Itself From Russia
  • 1,088 days Tech and Internet Giants’ Earnings In Focus After Netflix’s Stinker
  • 1,092 days Crypto Investors Won Big In 2021
  • 1,092 days The ‘Metaverse’ Economy Could be Worth $13 Trillion By 2030
  • 1,093 days Food Prices Are Skyrocketing As Putin’s War Persists
  • 1,095 days Pentagon Resignations Illustrate Our ‘Commercial’ Defense Dilemma
  • 1,095 days US Banks Shrug off Nearly $15 Billion In Russian Write-Offs
  • 1,099 days Cannabis Stocks in Holding Pattern Despite Positive Momentum
  • 1,099 days Is Musk A Bastion Of Free Speech Or Will His Absolutist Stance Backfire?
  • 1,100 days Two ETFs That Could Hedge Against Extreme Market Volatility
  • 1,102 days Are NFTs About To Take Over Gaming?
How The Ultra-Wealthy Are Using Art To Dodge Taxes

How The Ultra-Wealthy Are Using Art To Dodge Taxes

More freeports open around the…

Strong U.S. Dollar Weighs On Blue Chip Earnings

Strong U.S. Dollar Weighs On Blue Chip Earnings

Earnings season is well underway,…

Market Sentiment At Its Lowest In 10 Months

Market Sentiment At Its Lowest In 10 Months

Stocks sold off last week…

  1. Home
  2. Markets
  3. Other

Spanish Fun Run Exposes Euro's Challenges

Friday's rumor of a run on a Spanish bank proved to be false, but may have shed light on Europe's ongoing challenges.

Banco Bilbao Vizcaya Argentaria (BBVA) sponsored a fun run that drew a large crowd on Friday morning. The banks queues falsely spurred insolvency rumors that sent ripples throughout the financial world.

While the rumors were squashed hours later the damage was already done. The euro tumbled nearly 1% against the dollar as the scrutinized 2-year EU/US yield differential narrowed to a 2-week low.

More importantly, however, for the first time in sometime event risk was driven by news from outside the United States. The currency markets have been obsessed with the anticipation of the Federal Reserve's QE II. According to Ashraf Laidi of CMC Markets, the EUR/USD has risen 3.5% in a 2 week span while Irish/Greek/Spanish 10-year spreads widened 20-25% relative to German yields.

With memories still fresh of the European sovereign debt crisis, widening periphery spreads are causing many to refocus on the Eurozone's challenges. The Irish spread widened to a record high against the benchmark German Bund on Friday. This highlights Ireland's debt problem due to mounting cost of bailing out the problematic banking system.

Elections in Greece have highlighted anxieties of austerity measures, causing the Greek/German to widen to their highest levels since September. And in Spain, spreads have widened to 4-month highs as government's budget cuts continue to face widespread opposition.

Friday's positive non-farm payroll report may suggest that the US economy is not as bad as Ben Bernanke and company have expected. With QE II now fully discounted there is a high probability that market focus could shift back to Europe's stressed sovereign political outlook.

While it may be premature to call a bottom in the US Dollar, there is technical evidence that Friday's corrective recovery could continue into the middle of next week. Bullish diverging daily studies could direct dollar bulls towards the resistant 20-day moving average.

 

Back to homepage

Leave a comment

Leave a comment