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27 Mar 2013
Forex Flash: Risk premium in EUR slated to unwind over next months – ANZ
FXstreet.com (Barcelona) - The EUR has moved sharply of late. This has presented opportunities for some crosses with the EUR/AUD being one of them. In regards to this cross where are grounds to expect to expect a substantial rally in the EUR/AUD over the next 3-4 months.
Comments from key EU policymakers overnight have muddied the waters. However, the market will come round to view Cyprus as a truly unique financial crisis and the terms of its bailout as exceptional. Indeed, a sober inspection of Cypriot banking sector liabilities suggests that the banks’ capital structure permitted no other option but to equitize depositor holders. Given time, the contrast with banking sector liabilities in Italy, Spain and Portugal will become obvious.
According to Strategist Andrew Salter at ANZ, “As that happens the perceived risk of contagion driven by fears of euro-wide deposit appropriation will abate. Investors will become more comfortable with the sanctity of euro zone deposits and the risk premium in the EUR will unwind.”
Comments from key EU policymakers overnight have muddied the waters. However, the market will come round to view Cyprus as a truly unique financial crisis and the terms of its bailout as exceptional. Indeed, a sober inspection of Cypriot banking sector liabilities suggests that the banks’ capital structure permitted no other option but to equitize depositor holders. Given time, the contrast with banking sector liabilities in Italy, Spain and Portugal will become obvious.
According to Strategist Andrew Salter at ANZ, “As that happens the perceived risk of contagion driven by fears of euro-wide deposit appropriation will abate. Investors will become more comfortable with the sanctity of euro zone deposits and the risk premium in the EUR will unwind.”