All eyes on Spain as China inspires risk with a liquidity injection

<p>The FX space is quiet today. Currencies continue to trade close to where New York left them as we consolidate within a 1.2825-1.2925 range. The […]</p>

The FX space is quiet today. Currencies continue to trade close to where New York left them as we consolidate within a 1.2825-1.2925 range. The lack of political will to fix the eurozone crisis escalated further as Spain’s borrowing jumped back through the 6% barrier yesterday. Focus remains on Spanish PM Rajoy after he commented that budget reforms could take three years thus making today’s approval of the 2013 budget between 1-2pm BST time my highlight as this could lead the way for an official request for a bailout.

Risk sentiment was boosted overnight as the PBOC announced the bank had injected CNY365 billion into the market this week versus CNY101bn last week but speculation of further stimulus measures have been quashed as the market see’s the increase as nothing more than a liquidity measure as China approaches it’s golden week holiday.

We are approaching the quarter and month-end rebalancing horizon so expect significant flows to be hitting the market over the next few sessions.

 


EUR/USD

Supports 1.2840-1.2825-1.2750 | Resistance 1.2925-1.2970-1.3000


USD/JPY

Supports 77.60-77.15-76.70 | Resistance 77.85-78.05-78.80


GBP/USD

Supports 1.6150-1.6100-1.6070 | Resistance 1.6225-1.6270-1.6305

 

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