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European markets down on Cyprus

FXstreet.com (Barcelona) - The German DAX 40 (-1.10%), the French CAC 40 (-1.10%), the Italian FTSE MIB (-2.15%) and the Spanish IBEX 35 (-1.96%) are down on Monday, the same way the other European equity indexes are, as Cyprus bailout news reached investors' ears this weekend.

The Parliament vote on the bailout measures was postponed to tomorrow or Friday as the terms regarding taxes on deposits below €100k are renegotiated. “There has been talk of breaking the tax into 3-4 tiers, that could see very smaller depositors avoid any next, a tax around 3.5% for those less than €100k, and then higher rates on those above €100k and a further increase in the rate for those above €500k in deposits”, said TD Securities analyst Richard Kelly, adding that everyone would still receive some sort of equity claim on the banks to offer the prospect that, rather than a tax, this is a forced shift from a demand deposit to a longer-term investment.

Futures for the American S&P 500, Nasdaq 100 and Dow Jones are signaling a lower opening between -0.55% and -0.85% ahead of a pretty empty economic calendar, with US NAHB housing market index and 3 and 6-month bills auction.

Forex Flash: Cypriot Parliament vote canceled as terms are renegotiated – TD Securities

The bailout to Cyprus is being object of renegotiation so smaller depositors won't suffer the announced 6.75%. “There has been talk of breaking the tax into 3-4 tiers, that could see very smaller depositors avoid any next, a tax around 3.5% for those less than €100k, and then higher rates on those above €100k and a further increase in the rate for those above €500k in deposits”, said TD Securities analyst Richard Kelly, adding that everyone would still receive some sort of equity claim on the banks to offer the prospect that, rather than a tax, this is a forced shift from a demand deposit to a longer-term investment. “Effectively, this is a maturity extension of deposits like you would with bonds”, he concluded.
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The EUR/USD was able to a retrace many of the pips lost as the week started, bouncing from 1.2882 already to 1.2976, but still 100 pips below the opening price of 1.3076. The market is currently settled around 1.2950 as investors digest more news from Cyprus.
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