The comments of Luxembourg's Finance Minister Luc Frieden that 'You can never rule out capital flight from the EMU, 'Deposits in other EMU countries are safe' and to "Expect more instability in in EMU countries in coming days' , have crushed the euro on the approach to the London close. In the past 60 minutes the united currency has dropped from 1.2942 to 1.2875 and is now holding just above support at 1.2880 and the 200 day moving average at 1.2875. The euro has not been this low since November 22nd last year.
With news reports circulating that the Cyprus parliament is set to reject the European bank rescue deal and that the Cyprus Finance Minister Michael Sarris has offered his resignation pressure on the euro will likely remain strong and consistent until the denouement in Cyprus and that may not happen for several days.
Chief Market Strategist