Forex Flash: EUR gaining support from sovereign credit risk premium tightening – BTMU

By FXstreet.com | November 29, 2012 AAA

FXstreet.com (Barcelona) - Lee Hardman, FX analyst at the Bank of Tokyo Mitsubishi UFJ notes that the Euro is gaining support from a tightening in the euro-zone sovereign credit risk premium with the 10 year yield spread between Spanish and Italian over German Government bonds having narrowed by 0.61 and 0.35 bps respectively since the 19th of November.



He writes, "The yield on the 10-year Italian government bond has fallen to its lowest level since mid-May 2011 highlighting the ongoing return in investor confidence since the ECB committed to purchase unlimited eurozone government bonds."



Elsewhere, European Commission President Barroso revealed a plan yesterday for further Euro-zone integration which included proposals to establish a full scale Euro-zone treasury over the next 18 months to five years which would gradually gain powers to control national budgets as well as raise money on its own for a new Euro-zone budget through taxes or bond issuance.



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