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Forex Flash: Next headlines on Cyprus to provide a sense of timelines - TDS

FXstreet.com (Barcelona) - After the Cypriot Parliament voted no to a bank levy, in view of Richard Kelly, Head of European Rates and FX Research at TD Securities, "their first alternative is to try to negotiate Russian support on Wednesday to see if they can get a better offer or negotiating power with the Eurogroup, however, Cyprus has little leverage with either."

Richard adds: "The fact that spiting a deposit levy meant to raise €5.8bn would put Cyprus on the hook for €30bn instead is the math that makes a hard bank default difficult to fathom, but that is the downside risk that the no vote has now opened up for Cyprus. Wednesday headlines should provide a sense of what timeline Cyprus is working on—days or weeks? If the former, the ECB should be willing to roll ELA assistance, but a lack of perceived urgency could well test ECB patience."

Mr. Kelly believes that at this stage, "ECB officials may be unwilling to pull ELA (emergency liquidity assistance) support via a 2/3 vote this week if there is a prospect of a Cypriot decision in a matter of days, but the ECB will not provide weeks to Cyprus and with LTROs and the OMT at their disposal, would be willing to withdraw support now that Parliament has voted no."

"Headlines on the Russia visit Wednesday become key for determining the sort of timeline we are talking about" Richard concludes.

Forex: EUR/USD retraces all Monday gains from gap and trades at fresh 2013 lows

The Euro traded lower on Tuesday following the developments in Cyprus with special attention. Into a sea of rumors, the EUR/USD was hurt by the wires as sources was spreading resignation talks or bailout approvals. Finally, the Cypriot parliament rejected the bank deposit levy and blocked the €10Bn bailout with a great majority.
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Forex: EUR/USD, more danger to the downside – FXWW

EUR/USD is last at 1.2864, retracing from a spike higher during mid NY trade to 1.2924, and off previous weekly and fresh 4-month lows at 1.2842. The pair has resumed the downside started at the very weekly open, losing by now a -1.64% for the week so far. The SP500 also closed lower for the day by -0.24%, while US 10 year note yields fell to 1.92% from previous 1.96% as demand for safe havens piled up.
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