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  1. #11
    The euro fell against the yen before data forecast to show the region’s economy shrank and as Italy edged closer to a new election after an inconclusive vote.

    The yen strengthened against most major counterparts after testimony from deputy governor nominees to the Bank of Japan (8301) failed to raise expectations for expanded monetary stimulus. The euro was 0.5 percent from an almost three-month low against the dollar before European Central Bank President Mario Draghi and his board meet on March 7. Australia’s currency rose for the first time in four days after Reserve Bank refrained from cutting interest rates.


  2. #12
    Portugal Outlook
    Demand for the euro was bolstered after S&P affirmed Portugal’s rating and raised its outlook to stable from negative. European lenders will probably extend support to the government and make the nation’s fiscal tightening “more sustainable,” S&P said in a statement today.
    “The key really is that S&P is leading the other two ratings agencies with this move, so that, at the margin, helps with euro sentiment,” said Sue Trinh, a Hong Kong-based senior currency strategist at Royal Bank of Canada. “Euro’s underperformance overnight was in part due to speculation that the ECB might cut. There’s a lot of event risk and volatility around the announcement.”

  3. #13
    Former Italian Prime Minister Romano Prodi said fiscal austerity measures in Europe have been excessive and called the euro too high.
    “The euro has a very high rate of exchange,” Prodi, a former European Commission president, said in an interview with Sara Eisen airing on Bloomberg Television today. “I do think that it’s stronger than needed.”
    The currency shared by 17 European nations is about 14 percent overvalued relative to the U.S. dollar, based on differences in consumer purchasing power, according to data compiled by Bloomberg. The euro bought $1.3004 late yesterday in New York, about 6.4 percent higher than its average since 2000.
    Prodi has been mentioned as a possible candidate to replace President Giorgio Napolitano when his term expires in May. In a separate interview with Bloomberg News in Washington yesterday, Prodi dismissed speculation that he may be Italy’s next president, saying he had alienated fellow politicians over the years with his strong positions.
    In Italy, where the president is elected by parliament, Prodi said the person chosen is not the one who wins the most votes, but rather the person who elicits the fewest vetoes.
    “I have always been -- let’s say -- very strong-minded in my political opinion, I always take positions,” Prodi said. “I think that is not a concrete probability that the majority will vote for me.”


  4. #14
    The euro dropped to its lowest level this year against the dollar after an unprecedented levy on bank deposits in Cyprus threatened to derail the nation’s bailout and spark a new round in Europe’s debt crisis.
    The 17-nation euro declined by the most in three weeks against the yen as investors sought haven assets after Cypriot President Nicos Anastasiades bowed to demands by euro-area finance ministers to raise 5.8 billion euros ($7.5 billion) by taking a piece of every bank account in Cyprus. The yen rose against all 16 major peers after Anastasiades delayed a vote on the measure in parliament until today.

    “The concern is that this bailout plan was forced upon deposit holders, taxing them and therefore an involuntary support for the bailout,” said Imre Speizer, a strategist at Westpac Banking Corp. (WBC) in Auckland. “If this is a template for future bailouts then that’s worrying for any of the larger countries if they have to go down this route. It isn’t affecting only the euro, it’s affecting risk appetite in general.”


  5. #15
    The euro earlier pared gains versus the yen on concern Cyprus’s bailout plan will fall through. The vote was delayed for a second day until today, and the country’s banks will remain shut until March 21, a government official said. The parliament probably won’t pass the bank-deposit levy, Reuters reported, citing government spokesman Christos Stylianides.
    “The notion of a failed vote knocked the wind out of the euro,” said Sean Callow, senior currency strategist at Westpac Banking Corp. (WBC) in Sydney. “The clock is really ticking on them. The banks are closed, and the economy can’t function if people can’t get their money.”


  6. #16
    The euro traded 0.3 percent from the lowest in almost four months against the dollar after the Cypriot parliament voted down a bank-deposit levy needed to secure a bailout, risking renewed tumult in the currency bloc.
    The 17-nation currency weakened for a fourth day versus the yen as an official familiar with the matter said European policy makers in Cyprus discussed further capital controls and extending a bank holiday through to the end of the week.

    “It’s an impasse with the Cyprus parliament rejecting the proposals from the eurogroup, and they will have to engage in further negotiations,” said Hans Kunnen, the Sydney-based chief economist at St. George Bank Ltd. “This just adds to the weight against the euro.”
    The euro was little changed at $1.2887 as of 6:37 a.m. in London from the New York close yesterday, when it touched $1.2844, the weakest since Nov. 22.


  7. #17
    The euro fell toward a four-month low against the dollar after a report showed Germany’s manufacturing industry contracted this month, underlining concern that the region’s biggest economy is stalling.
    Europe’s shared currency dropped against all of its 16 major peers after separate data showed German services expanded less than analysts forecast and French manufacturing and services contracted.
    “The weak economic data is hitting the euro, sentiment is very fragile,” said Antje Praefcke, a senior currency strategist in Frankfurt at Commerzbank AG. “Germany is one of the locomotives of euro-zone growth, so people are likely to become a little bit more cautious. The euro is likely to remain under pressure.”


  8. #18
    The euro traded 0.4 percent from the lowest level in almost four months after the European Central Bank gave Cyprus until the start of next week to agree to a bailout package or lose emergency funding.
    The 17-nation currency added to its biggest weekly decline in six against the yen after Cyprus Finance Minister Michael Sarris said the nation didn’t get the financial support it sought from Russia.
    “One of the main attractions of the European Union was to have these backstops from the ECB,” said Derek Mumford, a director at Rochford Capital, a currency risk-management company in Sydney. “The cracks are widening in the EU and the euro certainly has potential for further weakness and a move down to $1.2650.”
    The euro was little changed at $1.2900 as of 6:53 a.m. in London, after declining 0.3 percent yesterday. It dropped to $1.2844 on March 19, the lowest since Nov. 22. The 17-nation currency fell 0.2 percent to 122.16 yen.

    Last edited by Patkhak; 03-22-2013 at 09:26 AM.

  9. #19
    The euro rose versus most of its major counterparts as finance ministers from the currency union approved a bailout plan for Cyprus, reducing the risk of a default and a disorderly exit for the nation.
    The 17-nation currency rebounded from its biggest weekly loss in six against the yen as the so-called troika of international creditors prepared to deliver a 10 billion euro ($13 billion) rescue package.
    “Assuming it is all signed off, markets aren’t likely to be fussed about the details,” Sean Callow, a Sydney-based senior currency strategist at Westpac Banking Corp. (WBC), said in reference to the deal. “Euro should make a run at $1.31 in a relief rally.”
    The euro climbed 0.4 percent to $1.3039 as of 1:20 p.m. in Tokyo. It rose 0.7 percent to 123.63 yen.
    The agreement calls for Cyprus Popular Bank Pcl (CPB) to be shut down and split, according to unidentified EU officials. Deposits below the EU guarantee ceiling of 100,000 euros will be protected, and a loss of as much as 40 percent will be imposed on uninsured depositors at the Bank of Cyprus, two officials said. Uninsured depositors at Cyprus Popular would largely be wiped out, two other officials said.


  10. #20
    Political Risk
    Italy’s Democratic Party leader Pier Luigi Bersani has two days left to overcome a shortfall of support in parliament, after President Giorgio Napolitano gave him a mandate on March 22 to try to form government.
    “With the political risk in Italy continuing, it will be hard for the euro to make any headway,” said Yuki Sakasai, a foreign-exchange strategist at Barclays Plc in New York.
    The euro slumped 1.1 percent against the greenback yesterday, the biggest decline in more than eight months, as investors worried the levy on bank deposits in Cyprus could be replicated elsewhere.
    European Union officials said that the Cyprus aid deal will impose losses of as much as 40 percent on uninsured depositors at Bank of Cyprus Plc (BOCY) and sees Cyprus Popular Bank Pcl being wound down, wiping out bondholders.
    Dutch Finance Minister Jeroen Dijsselbloem, who leads the group of 17 euro finance ministers, said imposing losses on depositors and bondholders must be part of the bailout toolkit.


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