EUR softer following some widening in peripheral spreads; EcoFin meeting in focus
EUR is trading with a slight soft bias on a number of crosses (EURGBP, EURJPY, EURCHF) while euro zone equity markets are in the red led by financials. The moves appear linked to uncertainty on whether Cyprus needs or requests am increase in amount of bailout funds following a number of conflicting comments from Cypriot officials. Regarding loan extensions, our economists expect an unconditional endorsement for Ireland, but think for Portugal it owould be conditional on presentation of specific measures to offset for the EUR 1.3n of austerity measures outlawed by the constitutional court last week. The tightening in peripheral spreads, which had been constant over the past fortnight, has slowed and showing some signs of reversing. However, they still suggest EURUSD should be trading a figure higher from current levels of 1.3050.
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BNP Paribas