Improving economic data conditions favouring risk EZ nations

FXstreet.com (Barcelona) - This weeks calendar is jam packed and the EZ will come into focus as the market widely expects signs of improvements from the Eurozone.

The Euro remains bid while the risk premiums on Spanish bonds hit their lowest level in two years this morning and German yields remain high as markets eye the 10 yr dated curve to the upside. Investors are buying back into lower rated and riskier Eurozone nations, such as Italy (even amidst the conviction of Berlusconi and a nervous market around a wobbly coalition government) as their governments are retracting issues and debt sales as they approach their required funding targets, supporting the prices of bonds. Italy's one-year borrowing costs even fell to their lowest since June at a sale of Treasury bills on Monday. Spreads between the nations are narrowing while the euro zone second-quarter growth data on Wednesday is expected to confirm the member nation bloc is starting to stabilise. The 10yr bunds yields would be expected to increase on positive surprises, or simply meeting expectations to the upside. The German 10 yrs were up 2.4 basis points to 1.71.