Forex Flah: Short the euro if Spain borrows from the ESM - UBS

FXstreet.com (Barcelona) - The ultra US Dollar bullish team at UBS is out with a note to its clients recommending to sell the Euro vs the US Dolar for a possible target of 1.20 for next year "as the Eurozone's economy cyclically underperforms the US" they say.

UBS adds: "Should Madrid request aid the ECB will buy Spanish government bonds in the secondary market, initially causing the euro to rally - but we think investors should use such gains as an opportunity to enter medium-term euro shorts as Spain may not be able to meet the conditions of its ESM borrowing later in 2013."