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Forex Flash: When Madrid comes to the EU table in 2013, euro bears should too - UBS

By FXstreet.com,  January 06, 2013, 07:56:00 PM EDT

FXstreet.com (Barcelona) - The European Central Bank meets this Thursday, and in view of UBS Macro Research Team, the central bank "is again likely to remain unchanged... waiting for Spain to apply for aid from the European Stabilisation Mechanism."

Near term, UBS expects the recent 1.27-1.33 range in EUR/USD to keep holding for now. "Only when Madrid does apply for a bail-out and the ECB commits to more aggressive balance sheet expansion should euro bears start putting on structural short positions" the bank said.

Since 10 year Spanish yields are around 5%, Spanish Prime Minister Rajoy is likely to keep refusing external assistance, UBS notes. However, this situation is about to change according to UBS, noting that "the Eurozone bond markets will balk at large sales of Spanish bonds during the next few months, when Madrid comes to the EU table in 2013, euro bears should too."




The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.


This article appears in: Investing, Forex and Currencies

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