Cyprus Urges For Plan B Before ECB Deadline on March 25th, EURUSD Steady | IFCM
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Cyprus Urges For Plan B Before ECB Deadline on March 25th, EURUSD Steady - 22.3.2013

Cyprus bailout plan B developments have been closely watched by investors with EURUSD fluctuating in 1.2923/1.2879 tight range. In addition, mounting worries on the possibility of a Eurozone member exit weighed on risk sentiment. US equities closed in negative territory yesterday night, followed by Asia shares today with NIKKEI 225 falling by 2.35% and Hang Seng lower by 0.54%. ECB has announced that will maintain emergency liquidity assistance (ELA) to Cyprus until Monday, after that ELA could only be considered if an EU/IMF programme is in place to ensure solvency of the concerned banks. Therefore, today in Cyprus parliament discussions will begin for approval of legislation that would lead to plan B, including reorganization of banking system, creation of national solidarity fund and protection of guaranteed deposits below 100K. Adding to the pressure, Standard & Poor’s downgraded its credit rating on Cyprus by one level to CCC from CCC+. Since last Friday that first bailout plan drafted 10-year German bond yields dropped from 1.45% to 1.34% increasing the spread from Italy and Spain 10Y bond yields that remained in general steady.
Concerning other currencies, the USDJPY dropped from 96.12 to 94.53 despite that new BOJ governor, Kuroda, is advocating for further easing and stating confident that will achieve 2% inflation, appears that traders are taking profits on Cyprus fears. US dollar index is consolidating around 82.73 with slightly stronger than anticipated Jobless Claims and almost as expected Markit US Manufacturing PMI preliminary. The AUDUSD advanced higher to 1.0456 yesterday on Chinese PMI as well as on Julia Gillard’s second win but then edged lower to 1.0421 amid worries on European debt crisis.
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