The euro fell today as Spanish borrowing costs rose, but the European Central Bank signaled that it’s not going to buy nation’s debt, spurring talks that the debt crisis may spread to Spain.
The yield on 10-year Spanish sovereign bond climbed 18 basis points, or 0.18 percentage point, to 6 percent. The cost of insuring against a default in Spain jumped to a record. Klaas Knot, a member of the ECB governing council, said that he doesn’t see a reason to buy Spanish government securities.
Overseas, the economic environment also wasn’t particularly good. University of Michigan said in a preliminary report that US consumer confidence unexpectedly fell this month. China’s economic growth slowed, reigniting fears of so-called hard landing. The dollar strengthened on resulting risk aversion, driving the euro further down.
EUR/USD was down from 1.3185 to 1.3077 today. EUR/JPY dropped from 106.66 to 105.81, following the rise to 107.09. EUR/GBP ticked down from 0.8261 to 0.8249 and touched the intraday low of 0.8227.
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