Forex everyday - 19.03.13

19.03.13

• 13:00 –Italy, Industrial production
• 13:30 –UK, PPI, CPI
• 14:00 – EC, Construction output, ZEW survey
• 16:30 – US, housing starts, building permits
• The Cypriot parliament is expected to vote at 16:00 GMT today.

 
EURUSD
 
Barclays:
 

• Yesterday the Eurogroup seemed to clarify that small depositors should be treated differently from large depositors reaffirming “the importance of fully guaranteeing deposits below EUR100.000”. However, a headline out in earlyLondonsuggesting theCyprusparliament will not approve the levy saw EUR trade from 1.2960 to 1.2935.

 
Natixis:
 

• «It looks like it won't pass,» Cypriot government spokesman Christos Stylianides told state radio.
• Tuesday's vote, originally planned for Sunday, has been postponed twice already.
• Three parties have said outright they will not support the tax, while a fourth, in the co-governing coalition, said it cannot support it as it stands either.
• Cypriot finance minister Michael Sarris was due to hold meetings inMoscowon Wednesday.
• Stunned islanders emptied cash machines over the weekend and banks are to remain shut on Tuesday and Wednesday to avoid a bank run.
• Hundreds of protesters rallied outside parliament on Monday
• Euro zone finance ministers were in favour of imposing a 15.6 percent levy on deposits of above 100,000 euros to help recapitalise Cyprus' financial sector while sparing depositors up to that level, officials told Reuters.

 

• Goldman Sachs weekly idea: Short EUR at 1.2950, stop 1.3030, target 1.2820.
• SEB weekly idea: Short EURAUD @ 1.2460, stop 1.2580, target 1.2280.
• UBS: We maintain the short entered at 1.2967, targeting 1.2670, with a stop now at 1.3115, just above Friday’s failure high.

 
USDJPY
 
BNP:

USDJPY's dip towards 94.00 encountered buying interest by investors. We expect support for USDJPY on any dip this week as the BoJ's new governor, Haruhiko Kuroda, takes over on March 20. Our economists suggest that there is a distinct chance that Mr Kuroda will try to stay ahead of the curve and call an extraordinary meeting of the BoJ ahead of the scheduled April 4 announcement.
 
 
AUDUSD
 
Barclays: The RBA Board Minutes are broadly consistent with the statement that accompanied the 5 March decision – on hold with an easing bias. Worth highlighting these minutes were taken before the much better than expected February employment report. Separately Deputy Governor Lowe suggested that the cuts already in place should continue to support the economy “Now, if the monetary transmission mechanism works broadly as it has in the past, then an improvement in consumer sentiment and higher asset prices should feed through, in time, to higher spending by households”. These comments seemed to raise the hurdle for further easing; however the market still prices around 20 points of a cut by the end of the year.
 
Renat:
 

• Good chance to short EUR. Even if parliament votes, EUR may go down afterwards.
• So I change my table of relative strength to USD. EUR down (higher risks now)

In this situation we should take a closer look to Russian position. Russia is big lender for Cyprus. And Kremlin is against deposit tax (especially against bigger taxes on bigger accounts)… So maybe period of instability may take more time? ->of so, more chances for EUR to go down.