Spanish Regional Elections: Rajoy’s PP Wins in Galicia, Nationalistic

According to exit polls, these are the result of Spain’s regional elections: in the Basque Country in northern Spain, nationalistic parties PNV and Bildu won the elections. In the northeastern region of Galicia, the ruling Partido Popular won an absolute majority.

The latter result is a big relief for Spanish PM Mariano Rajoy, the Galician who leads the PP. A loss for his party would be a big  embarrassment. Did  postponing the bailout request  help his party win?

And will Spain now ask for a bailout? Markets are waiting for this since August.

Galicia is the northwestern corner of Spain, on the Atlantic ocean and its 2.7 million inhabitants speak  a distinct language. The ruling center right PP won 39-42 out of 75 seats in the local parliament, rising from 38 seats, according to the exit polls. Spain’s former ruling socialist party lost 7 seats in Galicia.

In the northern,  mountainous Basque Country, PNV and Bildu are neck to neck: with 27     for the former and 26 for the latter. The socialist PSE came in third with 13 to 15 and the PP slid to around 10 seats. Spanish mainstream parties slid also in Catalonia, in the recent general elections.

The Basque Country and neighboring Navarre enjoy fiscal autonomy: the local authorities collect the taxes and only pay the central government for specific services. This is the model that Catalonia wants. The big call for Catalan independence has raised similar calls in the Basque Country. The victory of PNV and Bildu will likely increase the debate.

The victory of the PP in Galicia, together with the  talk about a buyback program in Greece,the euro could find some support.

EUR/USD slid after the failed EU Summit, but didn’t quite collapse and remained above the 1.30 line.

For all the events and technical lines, see the  EUR/USD Forecast.