A sharp sell-off is seen across the board bringing crude oil back below $90 as fears over Spain’s outlook intensified and the crisis in general is back. With the deepening crisis in Europe, investors preferred to buy safer havens instead of risky assets and currencies driving the U.S. dollar upwards.
Assets and currencies edged lower amid rising fears over Spain and Greece. Starting with Spain, where fears surfaced again, the region might be forced to ask for international aid to meet its obligations after its domestic regions started to ask for help. An outside aid for Spain to pay it commitments will bring back the panic over the region’s ability to get out of the crisis.
It seems that Greece and Spain will put the region back in the danger zone, while the Troika will land tomorrow in Greece to assess whether the country is doing a good job in cutting expenses and on the path of fiscal reform as they committed in order to access the bailout cash.
However, any delay in achieving the adopted commitments will cost international lenders another 10 to 50 billion euros, according to German newspaper Der Spiegel. Also, The IMF has signaled to European officials that it will stop providing Greece with further aid, bringing the country closer to insolvency in September, according to an article in Der Spiegel yesterday that cited unidentified European Union officials as saying. It’s “already clear” to the Troika that Greece won’t reach the 120 percent target.
The situation remains uncertain and it is unclear whether Spain will ask for aid to help its regions now after it already needed aid to restructure its banking sector. If so, the current sell-off could be small in comparison to what will happen then. This uncertainty pushed the U.S. dollar higher as investors preferred safe havens, and the greenback opened today’s session with an upside gap 83.69 after it achieved huge gains on Friday rising from the opening at 82.87 to end the session at 83.50.
