Ahead of EU Summit, Spain Officially Asks for Banks Recapitalizaion - 25.6.2012

The Euro lost slightly today against the greenback ahead of the EU summit on Thursday. The EURUSD fell from 1.2520 to 1.2485, as markets participants are pessimistic that the coming summit will solve sovereign debt contagion problems for Spain and Italy. Still, it is expected that German Chancellor will be under pressure from other country-member leaders to take decisive measure to curb the contagion effect. Furthermore, Luis De Guindos, the Spain’s Finance Minister, has officially asked funds from the EU to recapitalize banks. However, there is uncertainty if the funds will be injected directly to the banks or will go through Spanish government and could add furhter to the country’s debt. This uncertainty added to the Spanish 10-year bond yield 20 basis points. Finally, the single currency is losing against the Japanese Yen up to 1.40 per cent since the opening of the FX market today, EURJPY opened at around 101.01 and at the moment is trading at 99.60.