(MENAFN– ecpulse) FX markets in Europe will closely watch the a handful of corporate earnings, German sentiment and UK inflation data on Tuesday, as traders seek a new direction amid fresh political turmoil in Spain.
Political pressure is mounting on Spanish Prime Minister Mariano Rajoy, after he refused to resign on Monday despite a political scandal that caught him. Rajoy sent supportive text messages to his party`s disgraced ex-treasurer for two months after the eruption of a corruption and tax fraud scandal, according to a Spanish newspaper cited by Reuters yesterday.
"Our institutions would not bow down to blackmail," said Rajoy, speaking on national television. He added that he won`t risk Spain’s budgetary reforms and political stability.
Meanwhile, focus shifts to the Spanish treasury as it hopes to sell up to 4 billion euros in 6 and 12-monh bills at bond auction later in the day.
The German ZEW gauge, which provides an overview of German investors confidence, could help define the next direction, and expected to hit a 40.0 in July.
European stocks missed the winning streak in Asia, where Japan`s benchmark index hit a seven-week high. German DAX, falling more than 0.1 percent around 8,223, is likely to rebound on third monthly improvement in the sentiment gauge.
July inflation data is expected from the United Kingdom on Tuesday. New Bank of England Governor will have to explain himself to the Chancellor George Osborne, if CPI inflation rises above 3 percent. We might see CPI at that level at 09:30 am.
On the earnings front, companies due to report today feature French L-Oreal and Acor, Swedish Swedbank and bearing company SKF rerpot second-quarter earnigns. UK miner Rio Tinto reports second quarter output.
Back to Spain, the renewed allegations are expected to trigger market unrest again. Analysts warned on tuesday that the odds of ealy elections could hammer investor sentiment, and punch Spain`s borrowing costs higher to fresh records.
As of 09:11 am, Spain`s 10-year bond yield rose 1.3 basis points to 4.723 percent.
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