Euro receives major boost from Spanish debt auction

Spain’s bond sale yesterday has given the Euro its near biggest weekly gain in a year against the Dollar. Investors in the Euro have reacted well to Spain’s ability to raise 3.5 billion Euros increasing confidence in the fund-raising ability of Euro nations.

Pound Sterling – UK Markets

The Pound gained on both the Euro and the Dollar overnight although each has just started to claw back some ground this morning. UK data that has been released this morning covers money supply, mortgage approval and public sector borrowing data. The UK has approved 51,000 mortgages in May up from 49, 900 the previous month adding to the wealth of recent data suggesting the UK housing market is beginning to recover. Santander, the Spanish bank who already owns Abbey National, Alliance and Leicester and Bradford and Bingley has submitted an offer to buy RBS’ Williams and Glyn’s subsidiary. RBS’ sale of this unit along with 318 branches was a condition of its bailout by the Government. Thoughts in the UK markets are turning to the fast approaching emergency budget on Tuesday next week. Although investors currently respond well to nations making decisive moves to rein in deficits, a budget historically shakes the Pound so there may be some volatility – speak to a Currency Solutions broker for advice.

US Dollar – US Markets

The Dollar has lost out to many major counterparts overnight including the Pound and the Euro although it has started to rise against the Euro again so far this morning. The Philadelphia Federal Manufacturing Index figures released yesterday were disappointing and are being attributed to bringing some weakness to the US Dollar. This was further reinforced by the rise in initial jobless claims. Jobless claims rose to 472,000 for the previous week rather than meeting an expected drop to 454,000.

Euro – European Markets

The Euro has gained against thirteen of its sixteen most traded counterparts. In particular, the Euro made a near weekly gain on the Dollar since May 2009 aided by the Spanish bond sale yesterday which has clearly helped investor confidence that Euro-zone nations can raise funds to tackle the crisis. Spain yesterday sold 3.5 billion Euros worth of 10-year debt.

Other Currencies – Highlights

The Yen has gained for the fifth day in a row against the Dollar as the new Prime Minister made public pledges to work to cut the Japanese public debt which is the largest in the world. He suggested he may do this by possibly by raising consumption tax. Other Asian currencies also strengthened as demand for higher yielding assets continued.