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Forex Flash: Quality of lending declines in Spain – Goldman Sachs

FXstreet.com (Barcelona) - Alongside the fall in lending volumes, the quality of lending in Spain has also declined. According to the Economics Research Team at Goldman Sachs Too much credit is extended to unhealthy sectors with poor growth prospects, such as construction, and too little net new credit creation towards more growth-friendly entrepreneurial and export-oriented sectors. This suggests the reallocation of capital has been somewhat inefficient, providing too little support to economic restructuring.”

Policy support from the ECB has been essential in avoiding a disorderly deleveraging by banks. Yet there have been costs associated with this support, which may have contributed to the low quality of lending and too little economic restructuring. The generous provision of bank funding has reduced bank balance sheet flexibility and encouraged banks to ‘evergreen’ existing loans. “These steps may have resulted in insufficient new credit becoming available, thus raising the costs of unsecured funding.” the team adds.

Forex: EUR/JPY drowns to 123.32 low

The Yen is rebounding once again from its lows after the awaited BoJ meeting and inflation outlook and the EUR/JPY is suffering the consequence. The cross failed to hold the 130.00 handle on Monday, and after some ranging throughout the week, the EUR/JPY is finally falling across the chart. From 129.38 high, the cross has already lost 200 pips down to 127.32 low once the economic calendar became empty.
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Forex Flash: Commodity-based face headwinds – UBS

UBS Strategists, Gareth Berry and Geoffrey Yu take a technical perspective at today's commodity-based currencies and outline the technical positions.
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