The yields on Spain’s 10 year government bonds are falling for a third day in a row and they are now at 4.99%, just under the round number of 5%.
At their peak earlier this week, they reached 5.6%, but have fallen on the hopes that the ECB will buy bonds. Indeed, Trichet fooled everybody and bought bonds – while he was speaking and boring the reporters at the ECB press conference, the ECB was grabbing lots of bonds – those were bonds of Ireland, which has been already “bailed out” and Portugal, which is marked as the next domino.
As long as Portugal doesn’t get aid, Spain is relatively safe. Spain is the Euro-zone’s fourth largest economy, and is too big to bail.
EUR/USD is now at 1.3264, just under 1the 1.3267 line. Next resistance is at 1.3334. Support is at 1.32. For more technical levels and analysis, see the EUR/USD forecast.
More good news came from the all-European retail sales figure – it came out slightly better than expected, a rise of 0.5% instead of 0.4%, with an upwards revision of last month as well – a drop of 0.1% instead of 0.2% initially reported.
