Spanish Bailout: Market Reaction To Spanish Resistance


(G7) Finance Ministers emergency call on Europe said to begin at 07:00 ET (1100 GMT). Reports indicate that pressure will be put on Germany on the upcoming G7 conference call, Germany was said to be pushing Spain to accept a bailout and Spain continues to resist.

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(ES) Spain Budget Min Montoro commented that Spain could not be bailed out and that neither France nor Germany had asked Spain to seek an international bailout.

  • Stressed that must continue reforms and that part of the solution must come from Europe.
  • Spain must increase market confidence.
  • EU must move faster to support Spain but was moving in the right direction.
  • EU banking union might be agreed upon before the Jun EU Leader Summit (schedule for Jun 28-29th).
  • Spanish banking sector did not need excessive amount of money.
  • Did not expect to increase VAT rate.

(ES) Spain PM Rajoy: Spain is in an extremely difficult situation; Europe must help with liquidity issues.

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  • Economic performance has been in line with govt forecasts.
  • Europe must reinforce the Europe project.
  • Banking union is necessary along with Euro bonds.

How to interpret these headlines?

Spanish Bailout is once again on the front and center of the news, with G7 emergency conference call scheduled to deal with this topic almost exclusively, although some may argue that Greece is also part of the discussion, but in reality there is really nothing to talk about on Greece until after the election on June 17.

Therefore, as expected, the focus was on Spain and the potential of a bailout… And once again I like to reiterate what I’ve said time and time again, that a bad news is not as bad for the market than uncertainty… this back and forth dance of Spain and Germany on the subject of a Spanish bailout is eroding market confidence in the Euro.  Traders rather invest in USD, knowing that the recovery is slow, than to invest in Euro, not knowing if the Euro is going to collapse… My view: SELL EURUSD on rally.

 

 

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About Henry Liu

My name is Henry Liu and I am a Forex Trader and Mentor. I help traders achieve consistent income trading Forex while spending less time trading. My focus in trading is a combination of Fundamental Analysis, Technical Analysis, and Market Sentiment. Far too many retail Forex traders concentrate on just one aspect of trading, technical analysis, and ignore everything else; it is my goal (and vision) to educate every trader on how to take advantage of news trading and become more balanced traders.

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