Spreadex Market Update
Euro stands firm
The euro was firmer against the dollar as sovereign bond yields continued to cool off.
Investors welcomed the news that Spain’s bank stress tests revealed the country’s ailing banking sector needed a little less than what the markets were expecting.
Both U.S. & eurozone manufacturing data contributed to the gains seen, with the eurozone PMI revised up to 46.1 from a preliminary estimate of 46 (although below 50 implies contraction, it was the second consecutive month of improvement).
US ISM manufacturing data rebounded sharply to 51.5 from 49.6 in August.
Hopes that Spain would seek a full sovereign bailout as early as next week were dented by the news that Germany would prefer that Spain waited for the opportunity to bundle their bailout deal with those for Cyprus and Greece.
The Spanish PM however denied German opposition to an individual bailout deal but did say that the country won’t be requesting aid this week. Spanish 10-yr bond yields climbed lower, demonstrating the improved mood surrounding Spain.
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