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FXstreet.com (Barcelona) - In Europe, EU Finance Ministers will aim to finalize the terms of the €100B Spanish bailout this Friday. According to Macro Strategy Analysts J. Reid and C. Tan at Deutsche Bank, "Our European economists think that the leaked MoU draft was positive, however direct recapitalization is not explicitly mentioned in the draft."

On that note the Bundestag will debate the Spanish bailout on Thursday and Merkel seems confident that she can win a majority backing. In a TV interview with a German outlet, Merkel said that loans to refinance Spanish banks will be backed by the Spanish government. She added that while EU leaders have agreed to directly recap banks in the future no decision was made to relieve governments of the responsibility of guaranteeing such loans.

Staying on the Spanish theme, an overnight Wall Street Journal article said that the ECB advocated imposing losses on senior bonds issued by the most severely damaged Spanish savings banks at the Finance Ministers meeting last week. Draghi was said to be in favor of including senior bank creditors in burden sharing but the finance ministers rejected the idea. According to the Wall Street Journal, the chief reason was the Irish precedent in that forcing senior creditors to take losses in Spain would have raised more questions in Ireland about why taxpayers were forced by the EU to take on the huge burden of repaying high-ranked bondholders.