Daily Market Review 25th of April 2014

Market Overview

The Bank of Spain continues to exuberate positive. National regulator has issued another economic bulletin about GDP growth in the first quarter by 0.4% in comparison with 0.2% in the 4th quarter of the last year. The lion share of the increase is provided by export. And though Spanish CB is talking about positive dynamics of consumer spending in conditions of record high unemployment it is hard to talk about any progress.

News about economic growth came out as on Thursday there was an auction on debt obligations allocation in Madrid. The key moment was sales of 10 year securities of 2.46 billion Euros. Investors still perceive a reform with enthusiasm expecting its positive effect in the real sector of economy.

Continuing fall of interest rate is partly explained by expectations of the beginning of European variant of quantitative easing. Against that background 5 year Spanish bonds are at a very high demand, as there is an opinion that securities with such maturity will be bought by the ECB in the framework of stimulating measures in this or that way.

Darghi himself claims that if in the future there is no expected inflation growth then the regulator will be ready for assets purchase. But there are no exact numbers named. March inflation dropped to 0.5% but consequently everything was attributed to season factors. That is why the key role will be played by April statistics. If the figure is not going to return at least to 0.7 – 0.8%, the ECB will have to undertake countermeasures.





The Euro has crossed upside resistance quite unconfidently. Nevertheless the outlook is bullish. The bias is as well supported by recent upward pattern, which can be seen on the chart.



The pair is still and the downward trend is intact. Resistance on the downside still holds. This is why there is hope that the rate will bounce of it. It would be the start of reversal of current trend.



The rebound of the Pound from support at 1.6763 continues. The rate is slightly above the middle of the range. At the moment the bias is bullish. Resistance on the upside is 1.6839.