Euro Higher on Greece, But Could Sink on Spain

Euro is higher today, gaining as questions about Greece are resolved. Eurozone finance ministers are expected to approve a bailout package for Greece, and that is helpin the 17-nation currency. However, euro could be headed for more trouble in the future, since Spain is the next point of focus for eurozone leaders.

Spain has been showing signs of trouble for almost as long as Greece, but the trouble has been less severe. However, Spain just announced that it didn’t meet last year’s deficit target, and it looks as though Spain will not meet 2012’s budget deficit. Worries about Spain causing the next eurozone sovereign debt crisis are on the rise. While the euro hasn’t been impacted heavily in Forex trading yet, there is a good chance it might be soon. Spain is the fourth largest economy in the eurozone, and this kind of trouble doesn’t bode well.
Also, it isn’t helping that a measure of risk aversion has appeared in the markets. Concerns about what’s next with China are weighing on risk, and could provide negative pressure on the euro. China announced a surprising trade deficit, and just recently lowered its growth forecast for 2012. This news, along with what’s happening in Europe, isn’t information to engender confidence.
At 13:24 GMT EUR/USD is up to 1.3126 from the open at 1.3112. EUR/GBP is up to 0.8391 from the open at 0.8367.

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