Today’s Highlights


  • Rumours that Cyprus plan is template for the future denied

  • UK growth data due at 9:30

FX Market Overview


The financial markets are still mulling over the repercussions of the Cyprus drama and their angst is being fuelled by comments by Dutch Finance Minister Jeroen Dijsselbloem, that the EU sees the Cyprus deal as a template for any further bailouts. i.e. bond holders will lose their fund entirely and larger savers would have some of their funds syphoned off to aid the bailout. That was later denied according to a report on Bloomberg but investors with funds in EU banks are understandably edgy and all eyes will be on the Cypriot withdrawals over the weeks ahead. The fear of a run on European banks and the political pressure that would produce is ever-present and there are many reports about the rise of the German Anti-Euro political party. The Euro remains at the weaker end of its range in anticipation of those events. The Euro-US Dollar rate looks destined to head for $1.2720 and Sterling – Euro is threatening to press towards €1.19 and perhaps as high as €1.1990.


Sterling is in a holding pattern ahead of this morning’s release of the final GDP growth figure for Quarter 4. A 0.3% contraction on the quarter and 0.3% growth on the year were the previous estimates so any revision to that is likely to cause short term volatility at the very least. That data is due at 09.30 GMT and this morning we will get the Bank of England’s pronouncement on the levels of capital UK banks will have to hold against their lending. That is likely to suck funds out of the financial system so Sterling might step back a bit when that news is released.


The Eurozone consumer confidence index at 10.00am. That has been uniformly poor over the last few years but all the shenanigans in Cyprus may well have put an even larger dent in the index so there is room for volatility there as well.


Funds slowing away from Europe are clearly finding their way into the Australian and New Zealand Dollars. These currencies appear to have taken on a new role as safe havens as both economies are in relatively good shape and the high interest rates and their status as suppliers to China make the Australasian countries rather attractive to overseas investors.


That’s your lot for today; there isn’t a lot of data but there sure is a lot of comment and speculation so we are expecting further choppy price action in most currency pairs. These are perfect condition in which to use automated market orders to improve your lot.


Aside from all the market nasties, there are nasties lurking in the Costa Del Sol as well. I am not talking about over-familiar waiters or horse meat salads, no the Spanish authorities are on the lookout for a stray 7tf long alligator that has been seen near Marbella. Police believe it may have been released by an unscrupulous exotic pet owner. It is unlikely to be dangerous to humans while the weather is colder but the danger will increase as the warmer air arrives and the gator becomes more active.