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CYPRUS may be Tiny, but Ticking bomb for Europe – March 22

March 22, 2013
 
GMT 3:16 – EURO @ 1.2912 = See Strong resistance around 1.2950, which should hold and break of 1.2770 is required for more losses towards 1.2820-40 zones. Euro needs to move beyond 1.2995-00 to regain some confidence.
 GMT 3:21 – GBP @ 1.5182 = As long as 1.5130-40 holds see upside risk. Break of 1.5235-40 zones will encourage for a move towards 1.5275-80 levels or else 1.5110 before up.
GMT 3:33 – JPY @ 94.95 = JYP has strong support around 95.50, but failure to move beyond 95.25 risk for more gains and break of 94.68 should see gains extending towards 94.20-40 zones.
GMT 3:38 – AUD @ 1.0424 = This week Aussie’s up-move was quite in line of my forecast, but I will be cautious buying around 1.0465-70, as see risk for a drop towards 1.0380-90 zones.
GMT 3:43 – GOLD @ $ 1613.70  = Gold remains in a buying mode on dip around $ 1610-12 and as long as $ 1605 holds, upside challenge towards $ 1618-20 is intact and will not be surprised to see a move towards $ 1622. However, any up-move would be good opportunity to sell.
 
 
Cyprus remains a matter of grave concern, as theEuropean policy marker’s could not corner the tiny nation that has a population of under million by penalizing its depositors. Instead of punishing the real culprit, it seems that this time lenders carrot and stick policy is not working well because the parliamentarians are unwilling to join hands like it happen elsewhere. 
I think the situation is very disturbing for the so called Troika, which is given the task to set the lending condition. This time it seems to have back fired and I am sure that if Cyprus Parliament does not succumb to the external pressure, the negotiator will come up with some sort of face saving formula/alternate. The risk and reality is that good part of foreign money will surely shift to another parking place. The amount could be tiny, but this is an eye opener for all the foreign depositor elsewhere, as it is just a glimpse of European problems in the pipeline, since there are many such cataclysm events that will occur at regular intervals because almost every European nation and USA is badly entangled in a web of debt.
In the economic front, yesterday’s Purchasing Managers Index suggest that European economy continues to contract, which could bring more pain and misery. Today’s only major economic data is IFO -Business climate that will be released by Germany.  Whereas, US economy is maintaining its upward momentum. Manufacturing activity is picking up, leading economic indicators are healthy and job condition is improving.   
Euro will remain under pressure unless there a settlement, which may not happen today. Aussie and Japanese are the real beneficiary. But I would not hesitate to pick the top to all, as Euro will find buyers on the up and AUD & JPY could correct.  
 
Currencies & Gold Later………….
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