Market Overview

Euro Holds Steady, European Central Bank Expected to Make Few Changes

The euro traded at 1.2942 on Thursday morning, making a steady climb towards its September high of 1.3169. The currency has held steady amid rumors of a Spanish bailout and Greece's exit from the eurozone. Markets have calmed in anticipation of the European Central Bank meeting and further news about a Spanish request for aid.

Though many were expecting a bailout request from Spain on Friday, Mariano Rajoy has denied these reports and continued with his own efforts to help the country recover from financial crisis. His lack of leadership and unwillingness to request aid from the ECB is cause for much criticism among investors. A request would allow the ECB to reduce borrowing costs by buying government bonds; and reduce the downward pressure on the euro.

Though uncertainty in Spain is weighing on the euro's value, prices have become a bit more solid as most believe a Spanish bailout is certain in the future. The currency is faring relatively well considering high unemployment numbers and predictions that Greece will be the first country to leave the euro zone, leading to a complete breakdown.

The European Central Bank will meet Thursday to discuss interest rates. The bank's already drastically low rate is expected to stand at least another month, but a future cut is imminent, according to a Reuters report on Thursday. September's meeting resulted in big changes for the eurozone and caused a boost for the euro when the bond-buying program was announced. Since the region has yet to implement this program, most are anticipating few big adjustments in October.

Posted-In: Mariano RajoyNews Forex Global Markets

 

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