Spain Back In The Spotlight, Euro Sagging
The euro retreated from its $1.31 high on Thursday morning following a day of bad news from the eurozone. The currency traded at 1.3057 on Thursday morning ahead of the European Central Bank's monthly meeting.
At their monthly policy meeting, ECB President Mario Draghi and his colleagues are expected to maintain the current interest rate of 0.75. Following the meeting, Draghi's news conference will be closely watched for clues about whether or not the bank will reduce borrowing costs in the future.
With the Greek debt problems temporarily off the table, investors have turned their attention to the Spanish economy, which is continuing to struggle after its banks received a bailout agreement. On Tuesday, a lackluster Spanish bond auction caused yields to spike and stirred up rumors about the country's need to request a full sovereign bailout.
Spanish Prime Minister Mariano Rajoy has previously dismissed the idea of asking for a bailout, claiming it would not be in his country's best interest. Despite his claims, a bailout request has been widely expected.
The flat bond auction has compounded speculation that the country is headed in the same direction as Greece. Catalonia, one of the wealthiest provinces in Spain, has been threatening succession while protests and strikes plague every major city. Social unrest and political instability have caused the country to become a focal point in the overall eurozone crisis.
The euro was also weighed down by poor data from the region showing that the current recession could continue into 2013. According to Reuters, business and retail data showed that consumer spending in October was at its lowest in six months. Purchasing manager data from the region also suggested that the eurozone was headed for another quarter of recession.
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