Spain Teetering, Euro Tumbling, Even Apple Struggling

The relentless march higher in Spanish borrowing costs continued after officials in Spains second most-populous region hinted they will be asking for a bailout. The yen was the top performer while the euro lagged. Australian CPI is the highlight of Asia-Pacific trading. 1 of the 2 EURUSD shorts hit all targets, Cable, Aussie & US crude near their final targets. See more below.

Spanish yields rose to a fresh record high after a high-ranking Catalonian official said the region will tap the bailout fund. Ten-year yields rose to 7.67%. Italian borrowing costs rose even more sharply on the day, surging more than a quarter-point to 6.60%.

The euro fell for the fifth consecutive day against the yen, touching an 11-year low. EUR/USD fell to 1.2043 shortly after the European close. Reuters reported that the ECB is considering negative deposit rates.

Chatter about a recession in the US ramped up after the Richmond Fed fell to -17, far below the -1 expected. The Markit manufacturing PMI also hit the lowest since Dec 2010.

Risk trades got a slight lift late in the day on a Hilsenrath WSJ article saying the Fed is itching to do more but those gains faded after the weak quarterly report from Apple.

At 0130 GMT, Australia releases second quarter inflation figures. Stevens was upbeat in comments yesterday so even a reading below the 1.3% y/y expected would be unlikely to force their hand. One troubling sign was a move by NAB to raise borrowing rates for businesses, according to published reports yesterday.

Also on the calendar at 0130 GMT, BOJ Gov Yamaguchi delivers a speech and press conference. Comments from new member Sato showed foreign bond purchases are on the table.

The market will also be looking to follow up on a Jiji report that Japan will extend its funding package for foreign takeovers.

1 of the 2 EURUSD Monday shorts hit all targets, while shorts in GBPUSD, AUDUSD and US crude are nearing their final targets. Neither USDJPY not the other EURUSD short were filled. USDCAD remains in progress. DIRECT ACCESS click here: http://ashraflaidi.com/products/sub01/access/?a=669 Non subscribers click here: http://ashraflaidi.com/products/sub01/

-AB