Daily Report: EUR/USD, GBP/USD, USD/CAD And USD/JPY

The U.S. Dollar advanced against the majority of its counterparts as relief over the Cyprus bailout quickly turned to worry. Investors are now concerned that this agreement may be used as a template to recapitalize other Euro-zone banks. Early on Monday, the region’s Finance Ministers and the International Monetary Fund approved the 10 billion Euro aid package for the small nation of Cyprus. This immediately prompted a rally in the equities markets and strengthened the Euro. However, reports indicated that Cyprus will have to close down the Cyprus Popular Bank Plc, wiping out investors holding bonds; furthermore, many uninsured depositors at the Bank of Cyprus Plc will sustain losses. This sparked concerns and caused the shared currency to erase previous gains. Today, investors will focus on a series of economic releases out of the U.S. which will offer information on new Home Sales and Durable Goods Orders. Meanwhile, Canada’s Dollar rose against most of its peers after crude oil, the country’s biggest export, reached a one-month high as Cyprus agreed to the terms of the bailout. The Loonie pared gains versus its American peer following comments by the Dutch Finance Minister, Jeroen Dijsselbloem, who suggested that the current deal may be used in the future to help any banks that require assistance. Canada’s currency traded higher against the South Pacific monetary units on reports which revealed that Western Canada Select, the guidepost for oil-sands bitumen, traded at $16.50.

The Euro slipped to a four-month low against the U.S. Dollar as market investors began to worry about the impact the bailout may have on the nation of Cyprus, despite the fact that it will help it avoid total financial collapse. The deal allows for accounts of $100,000 or less to remain insured; but it will bring losses to bondholders and anyone with bigger accounts. Today, Germany will report on Retail Sales, an indicator that offers clues about the region’s economic welfare. The British Pound traded at a six-week high versus the 17-nation currency amid worries that the political quarreling which took place will chip away at the faith investors have in the European financial system. The Sterling gained versus the U.S. Dollar but pulled away from a one-month high later in the session after the Dutch Finance Minister, Jeroen Dijsselbloem, explained that the current agreement could serve as template for future bailouts.

The U.S. Dollar advanced versus the Yen as sentiment in the Forex market improved after Cyprus secured the bailout it needed to avoid financial collapse. However, the Yen erased previous losses in anticipation of a speech to be delivered by the BOJ’s Governor, Haruhiko Kuroda, to the country’s lawmakers. Mr. Kuroda is expected to say that he’ll take the necessary measures to accomplish the 2 percent inflation target.

Lastly, in the South Pacific, the Australian Dollar came close to a two-month high versus the greenback after Cyprus obtained the international bailout which will prevent it from exiting the Euro monetary bloc. The New Zealand Dollar traded low against its U.S. counterpart before figures on the Trade Balance are issued, but gained upon the announcement of the Cyprus bailout agreement.

EUR/USD- Elation Over Bailout Wanes
The markets breathed a sigh of relief after the Euro region’s Finance Ministers and the IMF approved the 10 billion Euro bailout for Cyprus. However, the elation soon turned into worry once it was reported that the plan will see the biggest Cypriot bank restructured, the second biggest bank closed, and many uninsured depositors of the Bank of Cyprus Plc will have to endure serious haircuts. This agreement has raised concerns that future bailouts will also require the restructuring of the banking sector. In the meantime, the yields on Spanish 10-year bonds climbed to 4.96 percent, and Italy’s rose to 4.61 percent. Also of concern were the comments issued by the Chairman of the Parliament’s Finance Committee, Nicholas Papadopoulos wherein he intimated that the small island will enter into a deep recession and will experience high unemployment without any hopes for growth.
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GBP/USD- Home Prices Rose
The British Pound erased earlier gains against the U.S. Dollar as excitement over the Cyprus bailout waned after the head of the Eurogroup and Dutch Finance Minister, Jeroen Dijsselbloem, said that the rescue package which will prompt losses to many bondholders and depositors may be the used as the model for future bank bailouts. The Sterling was supported by industry data which confirmed that the average Home Prices in England and Wales rose 0.3 percent this month, and Home values in London climbed 0.7 percent.
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USD/CAD- Loonie Rallies On Oil
Canada’s Dollar advanced against most of the major currencies following reports which showed that crude oil, the country’s biggest export gained 0.9 percent and traded at $94.53 per barrel in the New York Mercantile Exchange. Crude oil Futures touched $95.65, the highest price since February. The Loonie also benefitted from news regarding the Cyprus bailout as it indicated that it will prevent the small island nation from exiting the Euro bloc. But the currency pared its gains following comments by the Dutch Finance Minister, Jeroen Dijsselbloem who suggested that banks should take care of their financial troubles prior to considering public money.
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USD/JPY- Kuroda Will Speak Before Lawmakers
The Yen gained against the U.S. Dollar as investors look forward to a speech the Bank of Japans Governor, Haruhiko Kuroda, will deliver before lawmakers today. Analysts have also explained that the strengthening of the Yen’s can be attributed to the fact that a number of companies may already be repatriating monies they earned from subsidiaries overseas, as March 31st marks the end of the fiscal year. Speculators believe the greenback will rally against the Japanese currency as they expect the new Governor will implement more aggressive monetary policies.
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Today’s Outlook
Today’s economic calendar shows that the E.U. will report on French Consumer Confidence. The U.K. will release data on the CBI Distributive Trades Survey. The U.S. will issue figures on Durable Goods Orders, Core Durable Goods Orders, CB Consumer Confidence and New Home Sales. Lastly, Australia will announce Business Confidence and New Zealand will publish the RBA Financial Stability Review.