Euro Drifting Lower Still
The Easter holiday in Europe ensured the weekend was relatively free of market-moving headlines. However there are fresh indications that deposits greater than EUR 100k in two Cypriot banks will likely sustain larger losses than originally feared. This may partly explain why EURUSD fell to a new 14-week low of 1.2771 overnight. A quarterly IMF survey released on Saturday probably did the euro no favours either. The survey revealed reserve managers were net euro sellers during Q4 2012 (as we discuss in more detail below). Meanwhile in Japan, USDJPY traded heavy in the wake of a quarterly Tankan report and the official China manufacturing PMI – both of which came in on the soft side of consensus. The Tankan showed that large Japanese manufacturers see USDJPY trading at an average of 85.22 during the current fiscal year which begins today. That’s well off current levels and provides the latest piece of evidence that corporate Japan remains sceptical that this USDJPY can last without experiencing a major correction. Today, with much of Europe still on holiday, the data calendar promises to be light, apart from the ISM manufacturing survey in the US.
Click here to read the full report: UBS
UBS