(ES) Spain Deputy PM Saenz commented that Catalonia is adding a new crisis for Spain. Spain rules out giving Catalonia control of tax revenue. Spain will activate regional liquidity fund this weekend. PM needs to know how much ECB would spend on debt.
(GR) Greece Fin Min Stournaras: Greece Fiscal gap to meet 2013 and 2014 budget targets currently stands at €13.5B – Note: Prior reports have suggested that Greece and the Troika were negotiating €11.5-13.5B in austerity measures.
(GR) There are concerns that Greece will need additional aid in order to finance its budget from 2015 – German Press
(GR) Greece’s Parliamentary Speaker Evangelos Meimarakis has resigned amid probe – FT
(GR) IMF’s Lagarde: Delays in implementing Greek bailout are expanding the financing shortfall; May downgrade global growth again – financial press
How to interpret these headlines from Greece and Spain?
Spain is obviously attempting to leverage the ‘OMT’ effect once again by asking ECB to commit to a bond purchase figure. Of course, this in itself is brilliant because any response from ECB will be positive for Spain, thus giving Spain more time before doing the inevitable; some might even argue that this may actually be more effective than the actual bailout itself, as speculators often get in early on these moves. The comment that Spain is maintaining control over tax revenues in Catalonia is also positive for Spain.
As far as Greece is concerned, today’s news on Meimarakis resignation definitely has some effects on the market, adding to the general uncertainty over the future of Greece. As Greece is desperately trying to convince Troika that it has turned a new page, I believe market will be on close watch; with regards to IMF Lagarde’s warnings on further global growth downgrade, I believe ultimately EU and Germany will concede and allow Greece to stay while kicking the can down the road to 2013.
Euro is obviously under pressure as these events unfold, but it is interesting to see that EURUSD has found support at 1.2850, as dealers noted buyers jumping in just below that level, citing large order from Middle Eastern buyers… With the outlook of EUR still positive after ECB’s OMT announcement and the expected weakness in USD after the Fed’s QE3, I’m convinced it will be just a matter of time seeing EURUSD back above the 1.3000 level.
Greece And Spain Uncertainties Weigh On The Euro…
September 25, 2012 by 4 Comments