The Spanish government hired two firms, Oliver Wyman Ltd. and Roland Berger Strategy Consultants, to give the ailing banks in the country a stress test.
The stress test assumes a 6.5% drop in GDP and 60% drop in home prices from the peak, but does not consider potential losses on government bonds, according to a oomberg report.
The required money to recapitalize the banks according to Wyman is between 51 to 62 bln euros, while Roland Berger concluded a 51.8bln euro need.
The results are within the expected 100 bln bailout fund Spain is asking for and is therefore not a negative shock.
The EUR/USD has been declining sharply today (6/21), but has stalled at 1.2550 after the results came out. A break below 1.2550 would form a double top in the EUR/USD suggesting a cap to June’s corrective rally.
Fan Yang CMT is the Chief Technical Strategist, currency trader, and the main contributor to FXTimes – provider of rex News, Analysis, Education, Videos, Charts, and other trading resources.
Information and opinions contained in this report are for educational purposes only and do not constitute an investment advice. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness. FXTimes will not accept liability for any loss of profit or damage which may arise directly, indirectly or consequently from use of or reliance on the trading set-ups or any accompanying chart analysis.
