Another Cypriot bank holiday

26 March, 2013

Graham Harborne

Yesterday saw another poor day for the Euro despite what seemed to be a resolution to the Cypriot bailout. The day started with slightly renewed optimism in the bloc currency as finance ministers agreed to a number of measures in order to enable the release of the €10 billion bailout fund. However as the day progressed it was clear there were a number of factors still to be agreed and with the banks still closed it was unclear how badly the tax implementations and the winding up of Cypriot bank Laiki were actually going to be. We were due to find this out today but late yesterday evening Cypriot ministers decided to keep the banks closed for at least another 24 hours so tomorrow is likely to be mayhem!

As the day progressed the euro continued to weaken against both the pound and the dollar and if that wasn’t bad enough a rumour started circulating that Moody’s were going to downgrade Italy. The euro fairly swiftly dropped ½ a cent on the back of this news, though with no announcement made damage was limited but we have opened this morning at similar levels to yesterday’s close.

Today there are limited data releases from Europe and the UK but a number of important releases from the States, include durable goods and consumer confidence. Markets are likely to be swayed by USD/EUR movements on the back of these releases and of course we wouldn’t be surprised if there were more Cypriot/Italian developments.

If you do have any requirements do stay in touch with your account manager here at Currency Index as the markets are extremely volatile at the moment.