Euro had peaked against the Greenback

Euro had peaked against the Greenback

The Euro has stabilised against the dollar after concerns over the Spanish bailout began to ease. The Euro had peaked above 1.2650 against the Greenback but was then the victim of increasing selling pressure after investors realised the deal might not be such a good thing. Many fled the single currency and returned to the relative safety of the Dollar. The Spanish bailout inevitably remained an important focus following the weekend announcement and there was a sharp decline in Spanish 10-year yields to below 6% for the first time in three weeks.

The Euro remains vulnerable as investors remain wary of the situation in Italy and the Greek elections which are due to be held on the 17th of June. The bond markets for Italy and Spain saw yields rise to more than the 6% mark raising fears that the next bailout will be aimed at Italy.

"Every time we get a piece of good news the market sells into it and looks for some bad news again," said Daragh Maher, currency strategist at HSBC."But ahead of the Greek elections people will be reluctant to go too short of the euro in case we get some good news, so it will stay quite rangy until then."

The greenback is set to strengthen against the Pound after today’s industrial production figures show that the UK economy has weakened worse than predicted.

David Tinsley at BNP Paribas said: “The outturn in overall industrial production implies a pretty poor start to the second quarter.”

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