I guess the Spanish caja recapitalization plan is helping narrow European sovereign spreads this morning.
While I’m not sure that shifting banking liabilities onto the government’s balance sheet is a long-term solution (see Ireland), it is giving the markets a near-term lift.
EUR/USD has pushed above 1.3500 again before slipping back to the present 1.3480 area. Scandinavian currencies, the market’s alternate safe-haven to the CHF are on the defensive today as leveraged accounts dump stale positions, underpinning the single currency.
