EUR/usd
After a week of markets' and investors' tortures, Cyprus has eventually found what it can sacrifice to prevent the uncontrolled swift crash of its financial system. Frankly speaking, Cypriots agreed to a slow and gradual dying of their banking sector. You see, in exchange of €10bln from the international creditors (the EU, the IMF, the ECB) Cyprus makes the second largest creditor of the country – Laiki- a “poor bank”, which in addition to its own debts will get toxic debts of the Bank of Cyprus. Deposits above 100K won't suffer restructing and won't be taxed. However, big investors may lose up to 40% of their deposits. These losses depend on how much money will be necessary to revive the Bank of Cyprus, which will also get the remains of Laiki. The final size of losses on the unprotected deposits will be reported later after the IMF's calculations. Formally, it is a verdict to the banking system of the island, which used to be a banking hub and due to this received the most part of its income. Now Cyprus is doomed to suffer the sharp GDP decline this year and sluggish if no growth in the coming years. Anyway, Cyprus is just a part of the euro zone, so the initial market reaction was, as expected by many, an impulse growth of the single currency and stock exchanges. eurusd at present is trading at 1.3035, the last week's gap will be formally closed when 1.3070 is reached, so there is still some space to pass. And this is just a matter of time if this space will be passed or not. Futures on the US stocks are hitting fresh highs, the Asian exchanges are growing well too, which speaks about stronger confidence in the recovery of the global economy. Under such conditions, the US dollar may continue to move down.
GBP/USD
The favourable state of affairs in the single currency hasn't produced any positive influence on the pound yet. The sterling is sooner affected by the internal factors. Thus, since Wednesday gbpusd has been gradually growing. Some fluctuations were observed in the pair on Friday evening on the news that Fitch will put the highest rating of Britain under reconsideration. Fitch, which usually act a bit quicker than S&P and Moody's, this time is a bit behind. It's quite understandable since the agency was waiting for the budget outlook. So, what makes Forex traders purchase the sterling? The answer is simple. The BOE is no longer satisfied with weakness of the sterling, it stated that the further volatility may seriously damage the economy. Besides, the retail sales data proved to be quite strong, though for a short time and due to weakness of the pound.
USD/JPY
The Japanese yen at the end of the week was sticking to the lower bound of its weekly flactuations in usdjpy. The morning positive in the market couldn't produce any serious selling of the yen. Actually, the Japanese currency is likely to be out of the market's attention till the next meeting of the BOJ, which will be held in a bit more than a week.
AUD/USD
The Australian dollar seems to be completely unaffected by the events on the global arena. Its independence from the correction in the stock exchanges and the further surge of optimism in Cyprus makes us think about the factors which actually impact the aussie. Apparently, this is revision of expectations in regard to the RBA's monetary policy and the continuing growth of China's demand for the Australian raw material. As a result, AUDUSD is now at 1.0460 ( the monthly high), moving further to the upper bound of the channel – 1.06.
