It looks like European officials are deliberately destroying Cyprus as one of financial centres The plan of $10 billion allocation was eventually approved. Earlier regulator called Monday a certain deadline. If decisions weren’t made, it could result in a complete default of bank system of the Island. In the agreement foundation a demolition of Laiki bank (the second Cyprus bank) is implied. Deposits under € 100k will bee transferred to Bank of Cyprus and no losses will be suffered by depositors. All accounts over € 100k will be relocated to the so called “bad bank”. It can result in losses over 30%. Besides, similar accounts in Bank of Cyprus will be frozen and losses here apparently will be inevitable. An important peculiarity of the plan was the fact, that it didn’t have to be approved in the parliament as in case with “deposit tax” initiative. All the cuts of big depositors are reached by banks’ restructuring. And in such a case there is no need of legislators’ approval. Basically that was the goal of IMF representatives during negotiations. In addition holders of bonds, issued earlier by Laiki bank, will be left with nothing. They will have to incur full losses on their investments. Investors have never been treated like that before in the Euro zone. In Greece during restructuring there were significant reductions, but not 100% losses of investments. Cypriots till the very end tried to avoid serious losses for big depositors, even threatening to leave the Euro zone. But as we now see it didn’t impress the IMF much. Cyprus didn’t dare to try going back to national currency. After such a smash of the financial system the outflow of capital looks imminent.
The Euro (1.2870) is under impact of Cyprus crisis. The market is concerned because of the probability, that some countries might follow the “example” of Cyprus. Obviously problematic countries are the first suspects. Resistance is at 1.29. Breaking below it can drag the rate to 1.27 and below.
The pair (94.35) gained 93.53 in the US session yesterday. At the moment 94.50 is Resistance and 93.50 is Support. There is a probability of a further dip to 92.65. It is anticipated to happen ahead of the BOJ Meeting next week.
The Pound (1.5177) declined from yesterday’s high near 1.5260. Resistance is at 1.5245. Support is at 1.5150. Analysts attribute a little dip to profit taking. Thus an aforementioned Support will be quite helpful to contribute to an uptrend movement. The Pound can test 1.5245-60 on the upside.
12:45am AUD RBA Gov Stevens Speaks
6:00am GBP Chancellor Osborne Speaks
7:00am GBP CBI Realized Sales
8:30am USD Core Durable Goods Orders m/m
USD Durable Goods Orders m/m
9:00am USD S&P/CS Composite-20 HPI y/y
10:00am USD CB Consumer Confidence
USD New Home Sales
USD Richmond Manufacturing Index
12:30pm CAD Gov Council Member Cote Speaks
8:00pm NZD ANZ Business Confidence