The week is finally at an end and traders are focusing their attention on this weekend’s general elections in Spain.  The event is being combined with what is now a public debate between European powers France and Germany as to the future direction of the European Central Bank.  Both are placing unwanted selling pressure on the EURUSD ahead of the New York close, with the rate now trading at 1.3520.

Preliminary election forecasts are seeing the probable departure of Spain’s current premier, Prime Minister Jose Zapatero this Sunday.  Instead, Spain’s center right political party, the Popular Party, is expected to win by a landslide – making stricter austerity packages imminent in the European country.  Market and news outlets will more than likely be monitoring the days following the election.  If the current opposition conservatives win, analysts will be scrutinizing detailed plans for additional austerity to be implemented very soon.

There is also speculation that European leaders will announce that they are well on their way to finalizing the implementation of the new bailout package announced last month.  Policymakers have been having difficulty with finding credible buyers of EFSF debt – allowing the fund to expand to a size that is worthy of battling the current crisis.  Among the dissidents have been major backers in both Russia and China – with the former announcing absolutely no interest in asset purchases.  Currently, institutional investors are congregating in Athens this weekend to mull over the 50% haircut promised at the original meeting in Brussels.

Complications with the EFSF have caused widening differences in opinion between both France and Germany on the role of the European Central Bank.  German officials continue to remain steadfast in the belief that the ECB should not be the lender of last resort – as well as involved in buying unsterilized sovereign debt – claiming that it would violate Eurozone mandates.