Euro Up on Cyprus Bailout Last Minute Agreement, Risk Sentiment Improves - 25.3.2013

The single currency gained ground against the greenback after Cyprus confirmed a bailout deal with ECB, European Commission and IMF at an extraordinary Eurogroup meeting last night. Cypriot President, Nicos Anastasiades, after long negotiations accepted to separate into a good bank and a bad bank the second biggest Cypriot bank, Laiki Bank, the good bank including under €100k deposits would be transferred to Bank of Cyprus while unsecured deposits with the bad bank are entering an uncertain phase. In addition Bank of Cyprus unsecured deposits would incur a loss of 30%. Cyprus in exchange would receive €10B from its international lenders, avoid collapse as well as any potential exit from Eurozone. The EURUSD escaped from 4-month lows at 1.2845 and began advancing on Friday as there was optimism on potential Cyprus deal which was confirmed early on Monday morning with the currency pair rising above 1.30, as high as 1.3046. Risk sentiment is improved, indicated by Asian shares closing in positive ground with NIKKEI 225 gaining by 1.69%. Risk appetite connected currencies have appreciated against the safe haven linked currencies due to Cyprus bailout plan with AUDUSD reaching almost a new 2-month high at 1.0466, EURJPY jumped to upside hurdle at 123.84 but still remains in 124.45/121.48 wide range.