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Size of ECB Cash Injection is a Hint of Risk to Euro-zone – March 29

March 29, 2013

News from Cyprus is still dominating the financial market, as banks finally opened on Thursday after 13-days closure that may have been possible after Bundesbank flew Euro 5-billion cash money as per German business daily Handelsblatt. ECB spokesman did not confirm the amount but did confirm that the funding was made available through ECB logistical reserves.
One wonders that a country that has a tiny population of under 900.000 can create such a huge mess then what would be the overall impact if such an incident is repeated or problem of some other nature occurs in another Euro-zone nation. I think ECB/Policy Makers are experimenting Cyprus, as they are well aware of the consequences and this is why they had to apply daily limit of Euro 300 on cash withdrawal and impose restriction on transferring money abroad, which technically means no cross border activity that should hurt Euro. 
Meanwhile, deadlock in Italy is already a big cause of concern and political stalemate is already a worrying factor and with Easter holiday today and in many countries on Monday. I think market should have mostly squared its position, which means Euro upside should be limited, GBP is benefiting from European development demand for Yen should ease off as Japan is already done with year end closing. Sign for gold is not very encouraging as gold could not take advantage of European unrest and found buyers on the rise, as most of the investment money flew to USA.

GMT 3:16 – EURO @ 1.2828 = Euro could be on its last uptick, which means it may find support around 1.2770-80 zones for a move towards 1.2870-80, before easing off. 1.2740-50 should not surrender.    
GMT 3:21  – GBP @ 1.5205 = Buy on dip preferred as 1.5160-70 should hold, but Cable is heavy around 1.5240 and could fizzle out on upside. However, 1.5140 should not surrender.    
GMT 3:26 – GOLD @ $ 1595.50 = Gold should exhaust around $ 1597-00 and hence, would pick the top to sell for a drop towards $ 1590-92, which can extend towards $ 1587-88. Apply Stops if $ 1605 breaks.
GMT 3:36 – JPY @ 94.08 = Gains for Japanese currency should limited up to 93.80 and unless move beyond 93.40 risk is for weakness, but 93.40-50 is the crucial level that needs to surrender for more losses.
GMT 3:39 – AUD 1.0417 = Likely to remain i 1.0390 – 1.0445 range. 
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