Fx currency trading starts the week with a weakened euro after latest German economic data was more fragile than expected and investors are still waiting on Spain’s bailout final decision and new developments in Greece.
The euro briefly went down below $1.29 against the dollar before going back up to the $1.30 level.
The German Ifo business climate index for industry and trade showed a continuously downward trend in September for a fifth consecutive month, dropping to 101.4 from 102.3 in August. Exporters and companies also shared on the pessimism, according to the report, for the first time in three years.
Volatility will surely hit fx currency trading as regular Spaniards will have to put up with more unbearable austerity measures and the Spanish Government prepares for a new round of reforms and a new budget filled with spending cuts and tax increases, allowing for the much-expected bailout request from eurozone partners.
On Thursday, the official 2013 budget report will be released, giving an idea of the real magnitude of the Spanish financial crisis. The fx currency trading market is expecting this release to ease some market movement, and perhaps introduce a viable alternative to a full bailout.
The Spanish finance minister, Luis de Guindos confirmed over the weekend that consultant firm Oliver Wyman is expected to ratify a figure of around €60bn, which represents the maximum amount that the Spanish financial system will have to ask for a bailout. The Eurozone had already set aside €100bn.
Catalonia, which is using the Spanish crisis to fuel historic independence ideals, is receiving negative feedback from Madrid, which promises to open up a new political debate in an already problem-plagued country and increase popular revolt.
Something Portugal is also enduring, as the government is preparing a new round of negotiations which will have unions and employers´ payments increase. Thousands of people took the streets to protest against the new measures, which will raise workers’ contributions from 11 to 18 percent.
Greece situation is also creating pressure on the euro in the fx currency trading market, as talks about a third program became louder on recent days. Austerity goals are hard to reach, and the country has announced that it is selling anything from islands to airports, palaces, roads, indeed, anything that can be sold.
The sell-off came about as Athens revealed that national income is projected to fall 25 percent by 2014 and the economy is not just shrinking, but slipping into a never before seen depression.
Since filing for its first €110bn bailout in May 2010, Greece has made almost no progress with its austerity goals, being forced to raise money in any way possible to meet euro demands.