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March 21st, 2013 at 4:46 pm

Focus Remains on Cyprus.

Friday’s calendar is relatively light on scheduled fundamental announcements, with only the IFO data from Germany being important enough to possibly move currencies. That does not necessarily mean markets will remain quiet. As we have seen in the past few days, they react with volatility to all news coming from Cyprus. Chances are, the same will happen again, if there are new developments to report.

The parliament in Nicosia rejected an earlier deal with the EU and the IMF, which called for taxing bank depositors. Now Cyprus has until Monday to come up with another viable plan or the ECB may cut off liquidity to its banking sector. Currently, there is talk about forming a national investment fund, with for participation from Russia. This fund, if created, would be backed by recently discovered natural gas and even church assets. It is impossible to say if this idea will gain traction or if something new emerges tomorrow. One thing is for sure – the Euro, and by extension all other majors, remain very sensitive to the situation.

Earlier in the week, I discussed two possible trades, both on the short side. One was in the EUR-GBP, with entry at 0.8571. Due to volatile opening on Monday, the price gapped through my intended order, so no trade took place. I sold it several hours later at a little better level of 0.8580. After a choppy journey, this position was closed today for 84 pips profit.

The other trade covered at the same time, a short in AUD-CHF, did not happen. The price moved in the opposite direction and the sell order is effectively cancelled. On Friday, I will look for short-term breakouts from tight ranges before the London opening, as mentioned many times before on these pages.

Mike K.

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