Spain Bailout

Spain Bailout
June 11th 2012

Greetings traders! This is Tony College with a fundamental update. Over the weekend, the announcement of Spains’ bailout brought about major gaps in the Foreign Exchange Market. The bailout made up to 100 billion euros available for Spains’ banks. This bailout is hoped to give Spain a boost in the midst of their economic misery. The money won’t be inputted directly into Spains’ banks. It’s said that the FROB (Spains’ government organization responsible for Spain’s banks) will be responsible for handling the money. Economists have been expecting this bailout to come. With unemployment rates hanging around 25%, it was very much so expected that a move like this would take place.

Many details remain unclear but European Commission’s spokesman Amadue Altafaj communicated that in the upcoming weeks details will be made known. The interest rate for loan will probably be around 3 or 4 percent. The loan will be financed from the European Financial Stability Facility (EFSF) or from the ESM (European Stability Mechanism). Spanish Prime Minister Mariano Rajoy has said that the move to recapitalize its banking sector does not constitute a bailout. So, as the ashes settle in the next couple weeks we will see more clearly how this has and will continue to impact the Euro-Zone.

There was a close below the four hour support. We could see a bounce back and a bearish follow through. Keep an eye on the news. This is when fundamental analysis is fun!

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