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Forex Trading: London Market Wrap

Posted by Chris Advincula on Apr 12, 2013 7:38:00 AM

April 12 Friday 11:40 GMT


The euro fell 80 points to 1.3040 from 1.3120 against the dollar and most of its counterparties in Europe, erasing the tenuous gains it made yesterday to 1.3138.

Cyprus again returned to the headlines with reports of the country asking for additional bailout funds beyond the 10 billion euro recently given to them by the Eu Commission, the ECB and the IMF.

The markets were quick to sell the euro and were roiled by reports that the Cyprus President Nikos Anastasiades planned to ask the European finance ministers for “extra assistance.” However, at 10:15am GMT, the Luxembourg EU Finance minister Luc Frieden said that the size of the Cyprus bailout funds will remain unchanged at 10 billion euros. Cyprus instead raised the possibility of using EU structural funds. The euro fall halted at the 1.3040 fragile support line.

Earlier in the session, the euro also fell to 1.3100 from 1.3125 based on a report by Germany’s Handelsblatt newspaper saying that the direct bank recapitalization  for the European Stability Mechanism bailout fund was “going in circles”.

European finance ministers meet in Dublin today to discuss Cyprus, Greece and Slovenia. A press conference is scheduled for 12:40 local time.

Slovenia’s bond auction this week failed to raise their targeted 100 million euros with bond yields reached record highs that can potentially push the country to seek bailout assistance, similar to Greece and Cyprus. The 2022 bond yield was at 6.215 percent this morning, approaching the record 6.38 percent high from March 27.

The IMF estimates that Slovenia will need to borrow about 3 billion euros this year to repay  maturing debts, finance domestic banks and finance its budget.  

Risk appetite waned following the Cyprus news. European stocks fell. Euro Stocks fell by 30.32 points to 2,647 (-1.02%) and DAX fell by 104 points to 7,779 (-1.17%) .

Cable fell by 62 points to 1.5343, Australian Dollar fell by 45 points to 1.0515 and New Zealand Dollar fell 60 points to 0.8575.

The euro 30-day moving average fell to 1.3055 from 1.3112. The 90-day moving average fell to 1.3080 from 1.3112.


Chris Advincula

Market Strategist


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