With interest rates on 3-month bills tripling since May, investors are clearly nervous about being exposed to Spain, even on a short-term basis. Normally this would be terrible news for the euro, but the currency took the results in stride. The EUR/USD also shrugged off a downgrade of Germany's sovereign debt rating by Egan-Jones, the small but extremely respectable rating agency. At the same time, shockingly brash comments from German Chancellor Merkel and Italian Prime Minister Monti also had very little impact on the euro.
The currency pair's resilience in the face of bad news reflects the lack of interest in one-sided positioning ahead of the EU Summit.
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