The Financial Times also reported that a deal had been struck on bank oversight, with European leaders agreeing to the ECB becoming a Eurozone-wide supervisor over the course of the next year. According to Reuters, German Chancellor Merkel warned that direct recapitalizations would not be available before supervision was in place. French President Hollande said overnight that 'when Spain considers it should request aid, additional conditionality should not be imposed'.
In other news, Spain successfully sold €4.61B bonds against a maximum target of €4.50B on strong demand – the 3y, 4y and 10y bonds were sold at yields of 3.23%, 3.98% and 5.46% respectively. Credit data in Spain saw bad loans rising to €178.6B in August, a slight rise from the July figures. According to Research Analyst Geoffrey Yu at UBS, “EUR/USD was largely unmoved on this, though reiterate our bullish stance. Moreover, a break above 1.3172 would be an important bullish development suggesting scope for the strength to target 1.3284, while support lies at 1.2983/43.”