By TraderVox.com
Tradervox (Dublin) – Investors have expressed fears in recent Spain bonds auction as they took less than expected. Investors bought 2.59 billion Euros worth of bonds against an expectation of 3.5 billion. This was 2.41 times the amount allotted which is lower than the previous sale in March which attracted 4.96 times. Spain’s prime minister, Mariano Rajoy accepted that Spain’s is at extreme difficult but indicated that the budget cuts that have been made are less painful than bailout.
The low demand of Spain’s debt led the euro to decrease to its lowest in a month versus the dollar. This also raised concerns in the market that the debt crisis in the region is still pushing away investors. The decrease in the euro also came after the European central bank settled to retain the low interest rates and also after the announcement by Mario Draghi, The ECB President that the ECB would make another round of stimulus if the need be. The ECB boss also indicated that the economic outlook of the region is still haunted with a downside risk. This led to a weakening of the euro against its major currencies.
According to some analysts, the EURUSD pair may test the $1.30 level in the coming few days as governments in the euro region struggle to tighten their budgets. If support is not found at $1.30 the pair is likely to move further down.
According to Mario Draghi, the ECB boss, the tensions in the euro area sovereign-debt markets are likely to dampen economic growth, which has been supported by the low up take of the Spain bond in the just concluded auction.
The euro decreased against the dollar by 0.7 percent to settle at $1.3142 after it had dropped to $1.3107 earlier in the day, which is the least it has been since March 16. Against the yen, the euro fell by 1.1 percent to trade at 108.37 yen where it had earlier dropped to 107.91, the weakest since March 13. However, the yen advanced against the dollar by 0.4 percent to trade at 82.46 percent.
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