FX.co ★ Is Spain in default? - Fundamental Analysis for April 11, 2012

European markets experienced a strong recovery after reaching the Tuesday’s lows.

The yesterday’s Dow Jones closure caused among investors: having closed at 12715 points, below 1.68%, though during the early U.S. session it indicated the signs of upward movement.

Along with this recovery of the major exchanges, the dollar took leading position against the major currencies. The euro is far from its Monday’s lows 1.3030; it makes everything to exceed 1.32 in the next few hours, keeping the speed of European and Asian session.

This fact coincides with a certain relief that comes from Spain. The European Central Bank hinted that he could buy the Spanish debt, and thereby reducing the cost of borrowing, hitting a 5-month high on Monday.

The situation in Spain, especially on its ability to pay debt, is currently in the focus of investor. It is clear that resolving this problem cannot be taken in a hurry and partially, as the one with Greece. Spain is a huge economic power remaining in top 10 until now and, as we have said concerning Greece, money problems are to be solved with money, not politics.

It seems possible however that Spain will enter a default. The consequences for world will be grave and current leaders, who do not have surplus or decision to solve this problem are risking with their positions.

As for the pound, which technically aimed at breaking a major uptrend on medium-term charts, moves away from the danger zone and is moving towards 1.60 level that can be reached during the Wednesday’s U.S. trading session.

The yen, meanwhile slowed its growth in recent amid news on the Bank of Japan money injections into the local economy trying to boost it through the purchase of assets and discarding any rate increase interest for the nearest future.

During the American session on Wednesday the data on oil inventories are to be released at 10:30 ET as well as Fed's Beige Book (at 2:00 PM).