[B]Market Review - 26/03/2013[/B] [I][B]21:40[/B][/I]
[B]Euro hits fresh 4-month low on Cyprus banking sector concern before recovering[/B]
The euro briefly fell to a fresh 4-month low on Tuesday as investors remained worried whether Cyprus’s bailout which brought deep private-sector losses in bank restucturings may set a precedent to other euro zone countries.
Earlire in Asia, although the single currency gained some respite after previous day’s selloff to a 4-month low at 1.2830 and edged higher to 1.2885 in early European morning, euro came under renewed selling pressure in New York morning and fell to a fresh 4-month low at 1.2828 due to comments by an EU lawmaker. Price pared intra-day losses and rebounded to session high at 1.2890 before retreating again.
A EU lawmaker said ‘European Parliament to push for depositors with abv 100k to face bail-in under new bank resolution law.’
Versus the Japanese yen, the greenback rose to 94.46 in early Asian morning after new Bank of Japan Governor Haruhiko Kuroda pledged to buy more government bonds to accelerate an end to deflation. However, price briefly retreated to 94.00 in European morning before rising again in New York afternoon, to a session high at 94.62.
In his parliamentary testimony, Kuroday said ‘will discuss policy specifics at BOJ board meeting; will consider extending bond maturities in asset fund; will discuss increasing purchases of long term bonds; want govt to take steps it pledged in joint statement with BOJ, as fiscal policy has impact on prices moves; expanding monetary base is necessary but not enough in pushing up prices; BOJ will seek to expand its balance sheet by accepting medium-, long-term assets to push down yields across curve.’
The British pound traded with a firm undertone in Asia and rose to session high at 1.5207 in early European morning, however, cross-selling of sterling, especially versus euro, pressured price and cable fell to an intra-day low of 1.5135 in New York morning before stabilising.
In other news, credit ratings agency Fitch placed Cyprus on rating watch negative and said ‘shock to Cyprus economy fm banking system will have “profound negative implications”; will resolve Cyprus rating watch once further key details of rescue program are agreed n made public.’
On the data front, U.S. durable goods came in better-than-expected at 5.7% vs forecast of 2.9% whilst consumer confidence dropped to 59.7 from previous reading of 68.0.
[B]Data to be released on Wednesday:[/B]
German Gfk consumer confidence; Swiss KOF indicator; U.K. GDP, eurozone CPI estimate, economic sentiment, business climate, consumer confidence and Canada’s CPI.