On Friday, the euro recorded a growth versus the dollar and the yen, but maintained its movement within the recent trading range of the currency. The present scenario of the currency’s market position is because of the market player’s wait and watch policy in view of the Spanish bailout. Traders are waiting for Spain to take some concrete measures to bettering the nation’s battered finances.
The euro was traded at $1.2952 on Friday, recording a 0.2 percent growth for the day, but it was 0.6 percent lower on the basis of the currency’s market position within the week. On Thursday, however, the currency slipped to its 10-day low position at $1.2824. But on Friday, around US$4.7 billion euros transaction took place, while on Thursday, the figure was a US$5.7 billion. It’s been seen that since mid-September the currency has been trading in somewhat tight range, hovering between $1.28 and $1.3170.
Till now, there is no clarity on Spain’s action to control the heavily indebted country’s economic scenario. Many market experts feel that the euro’s potential to soar higher will largely depend upon Spain’s formal request to bailout the worsening financial condition of the country.
While the euro was seen struggling to strengthen its position in the market, the single currency soared higher, as sovereign investors preferred trading in the currency. The key to the euro’s growth lies in the potential Spanish bailout request, however.
A potential Spanish financial aid request has been considered as a positive move for the euro’s upward movement by most of the market analysts. The Spanish bailout request is supposed to remove the uncertainties prevailing in the market, with regard to the currency’s positive growth. Many market players are also highly relying upon European Central Bank’s bond-buying scheme that is supposed to significantly bring down the borrowing costs for the troubled economies in the euro zone.
Amidst all speculations, on Friday, the Economy Minister of Spain announced that their country is fully ready to welcome the ECB bond-buying program and that there was no conflict of opinion within the country with respect to the bailout request. The Minister could not give any idea about the timeframe for the bailout but was confident of initiating the bailout request very soon.
The latest development and seemingly no political resistance on the way to Spanish bailout requests may trigger hopeful possibilities for the currency’s market position and this could be a good move for the crippling economies in the euro zone, feel many currency strategists.
The euro also got the boost following the International Monetary Fund’s announcement that the heavily indebted nations in the euro zone will be allowed more time to bring down their deficits. This flexible approach by the IMF is being seen as a relief factor for the European nations struggling hard to come out of their problematic economic scenario.
Another good news for the euro came from the research data that revealed that the manufacturing units in the euro zone recorded a significant growth in the month of August, which also boosted the currency. However, many Forex strategists feel that the currency is more likely to get a boost in the coming months following the Spanish bailout request.