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Forex Flash: Europe unlikely to unravel on Cyprus – Deutsche Bank

FXstreet.com (Barcelona) - The Cyprus situation still stands in systemic terms – a slow burner of an issue more than an immediate macro shock but not one to be under-estimated in importance medium-term. According to Macro Strategy Analysts J. Reid and C. Tan at Deutsche Bank, “For now assuming the proposal gets passed (the votes are seemingly not yet there) and even better watered down with small depositors bearing less or even none of the levy, Europe will likely only see small short-term collateral damage.”

However in spite of the protests that Cyprus is a unique case, the incident has probably ensured that if a bank or banking system in Europe is again under strain then depositors are, as a minimum, likely to be on the table as a bargaining tool and these depositors would be rational to think hard about the safety of their money and potentially seek alternatives.

However if you're looking for a positive, the outcry over the turning back on the pledge to protect depositors, especially those with less than 100k, might perhaps persuade the EU to tread more carefully in the future even though where the levy was set may have ultimately not been their call. They did sanction the deal though and perhaps both the EU and the Cypriot Government have been surprised by the verbal backlash, even if markets were less aggressive in their reaction.

Fundamental Afternoon Wrap: No escaping the Cypriot storm

This afternoon´s institutional research has stuck with the Cypriot theme due to the overwhelming liquidity of the situation. Is the vote on or off? Is the foreign minister on his way to Moscow? Has the levy been amended? Big questions are being asked but for now, the answers are unknown.
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Forex Flash: USD and EUR against the CAD – TD Securities

Broader trend dynamics are still fairly week and short-term scenario favors range-trading rather than a bullish break out, according to TD Securities analysts. “We cannot exclude a push through 1.0265 near-term but we would still rather look to buy dips—to the low 1.02 area—than chase this market higher”, wrote analysts Shaun Osborne and Greg Moore, pointing to still positive broader trend but the USD may struggle to make fresh ground. “At the same time, we think the 1.0175/85 area is fast devel-oping into the key short-term support zone for USD/CAD”, they added.
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