The US dollar continues to decline off its recent highs of last week, trading at 82.00 off of its high of 82.20 as the dollar eases and risk aversion levels lower, traders are moving back into equities and commodities and the US dollar crosses are showing gains. This morning in the Asian session the AUD, the NZD and the JPY climbed against the greenback. The AUD is trading at 1.0241, the kiwi is exchanging at 0.8295 while the JPY eased 36 pips to trade at 93.10.
The euro traded near a 2-1/2-month low against the dollar and fell against the yen on Monday, weighed down by political uncertainty in Italy and expectations the European Central Bank will cut interest rates sooner than previously thought. The EUR/JPY is trading at 121.36. While Italy appeared to be inching toward another round of elections after a market shattering disaster last week. Without a stable government, the country will be unable to pass reforms required to get its borrowing and debt under control.
The ESM euro zone bailout fund could set up subsidiaries to directly recapitalize banks to limit the negative impact that buying bank equity would have on its credit rating and lending capacity, a euro zone official said. Eurozone finance ministers pledged on Monday to agree a bailout for Cyprus by the end of March, but details of how the rescue will be financed are yet to be sorted out. Cyprus requested a bailout in June last year but it was not possible to reach an agreement with the last, communist-led government. A new, conservative government took office last month and negotiations have intensified. The troika of European Union, International Monetary Fund and the European Central Bank would send a mission of experts to Cyprus on Tuesday for a technical analysis of the country’s financing needs and to get a better understanding of the new Cypriot government, ECB board member Joerg Asmussen said. What was a thought to be a small simple bailout package is growing into a new thorn in the eurozone’s financial recovery. This morning Ministers called for the Cypriot government to close down on their money laundering facilities. Cyprus is reputed as one of the leading money laundering centers of the world.
This week traders will see central bank meetings by the Bank of England, the European Central Bank, the Bank of Japan. This morning the Bank of Australia held rates and policies. The Bank of England is expected to add some sort of stimulus or easing to help the ailing economy. The GBP has been trading an annual lows touching below the 1.50 level and is trading at 1.5126 this morning.
The dollar and the yen found modest support in early trades, with both currencies gaining a little ground on the euro on safe-haven flows, as global equity markets dropped after China’s move to cool home prices and worries about the impact of automatic US federal spending cuts. Haruhiko Kuroda, the Japanese government’s nominee to be the Bank of Japan’s next governor, told lawmakers on Monday that it would be difficult for the central bank to buy large quantities of foreign bonds under current international rules on currencies -.
