04, April 2013

EUR/USD (a 4-hour chart)

EUR/USD (a 4-hour chart)

Cyprus salvation has limited impact on financial markets.

Money markets largely rested on the salvation of Cyprus, but obviously tightening liquidity conditions may make them less resilient to future outbreaks of the debt crisis in the euro zone.

The gap between the "risk-free" overnight interest rate and the expected cost of interbank loans increased last week, as investors worried that salvation can spread like an infection, raising fears that a precedent was set for punishing depositors.

The euro zone has experienced the largest outflows in March, with the end of 2011 - at about the same time - the ECB's liquidity injection.

Data on the labor market in the region is also not encouraging. Unemployment remained at 12% in the euro area in February which is the highest value in the history of the currency bloc.

The unemployment rose in Cyprus to 14% from 13.7%, and in Spain - to 26.3% from 26.2%. In Germany, the unemployment rate remained at 5.4%, demonstrating the difference between the situation in the core and peripheral economies of the eurozone.

There will be a meeting of the European Central Bank on Thursday. It is expected that the key rates will be left unchanged.

Business activity index in the services sector for March in Spain, Italy and the euro zone is published today.
The main event of the day is ECB President Mario Draghi press conference at 16:30.
Fed Chairman Ben Bernanke speaks at 18:30.