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Forex - EUR/JPY tanks on escalating Spanish debt woes

ForexJul 20, 2012 02:51PM ET
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Investing.com - The euro plummeted against the yen on Friday, dipping to its lowest level in over a decade after Spanish yields rose on fears the Spanish economy is taking a turn for the worse.

In U.S. trading on Friday, EUR/JPY hit 95.38, down 1.18%, up from a low of 95.35, a low not seen since 2000, and off a high of 96.68.

The pair sought to test support at 95.35, the earlier low, and resistance at 96.68, the earlier high.

Spanish Budget Minister Cristobal Montoro said earlier that the recession gripping the country today will extend into next year, with gross domestic product falling 0.5 percent in 2013 instead of expanding 0.2 percent as originally forecast.

The news sent yields in Spanish government debt markets soaring to above 7%, a level deemed unsustainable by markets and illustrating a country in need of a bailout.

Eurozone ministers signed off on terms to give Spain EUR100 billion bailout for its banking sector as well as for regional governments, though investors fear the country itself will need a sovereign rescue as well.

The regional government of Valencia in Spain, meanwhile, said it would need assistance from Madrid, which helped push the euro lower against the yen, a safe-haven currency.

Earlier this year, the Catalonian government said it would financial assistance from the Spanish government, as the country wrestles with debt burdens stemming from the real estate collapse.

The euro, meanwhile, was down against the pound and down against the Canadian dollar, with EUR/GBP trading down 0.35%  at 0.7783 and EUR/CAD down 0.55% and trading at 1.2305.








Forex - EUR/JPY tanks on escalating Spanish debt woes
 

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