Your forexlive.com ENewsletter

Japan press: Diet to confirm five-year term for BOJ’s Kuroda
ForexLive Americas wrap March 22, 2013: Cyprus nears solution
Just in time of the weekend, Cyprus spokesman says in final stretch of talks
Cyprus parliament to meet tomorrow on deposit levy – CYBC
COT report: AUD longs back in fashion
Colombia cuts rates 50 bps to 3.25%
Lebanon’s Prime Minister resigns
Cyprus lawmaker Neofytou says important steps taken to positive outcome – BBG
Staring at the wires, waiting for headlines on Cyprus
Troika pushing for 15% deposit levy – MNI
Fitch submarines pound by placing UK on Ratings Watch Negative
Bersani to hold meetings in attempt to form government
Cyprus parliament will convene today – CYBC
European equity close: Holding pattern
Troika wants more money from Cyprus – MNI
Revisions to US industrial production
Cyprus ruling party cautiously optimistic on deal
Cable jumps to one-month high
The original plan for Cyprus is back on the table – FT
ECB rejects Cyprus parliament committee changes – MNI

Japan press: Diet to confirm five-year term for BOJ’s Kuroda

Posted: 22 Mar 2013 09:21 PM PDT

From the Japan Times: Diet to confirm five-year term for BOJ's Kuroda

Due to Shirakawa resigning early Kuroda’s appointment as BOJ head was only, officially, until April 8 and he must go through the procedure again to be appointed for a full 5-year term.He’ll be appearing before the Japanese parliament on Tuesday (March 26) for the confirmation hearing.

Kuroda is almost certain to be endorsed by the Diet for a second time, winning support from part of the opposition camp.

ForexLive Americas wrap March 22, 2013: Cyprus nears solution

Posted: 22 Mar 2013 01:04 PM PDT

Forex trading headlines from Friday’s New York session:

Cyprus to vote on 9 bailout bills tonight
Cyprus will vote on deposit tax Saturday
Troika now wants 6.7 billion euros compared to 5.8 billion originally – MNI
Fitch places UK on Ratings Watch Negative
Italy’s Bersani to hold meetings in attempt to form government
Fed’s Raskin says rates should stay low ‘for a considerable time’
Belgian business confidence falls to 3-year low
Revisions to US industrial production
Lebanon's Prime Minister resigns
Colombia cuts rates 50 bps to 3.25%
S&P 500 gains 0.7% to 1556, down 0.2% on week
EUR leads, USD lags

The euro jumped on a Reuters report saying a solution on Cyprus could be possible within hours. That pushed EUR/USD through 1.3000 from 1.2960 at the start of US trading. Details have been scant but a deal appears to be coming together. EUR/USD has spent most of the US afternoon around 1.2985.

If not for the news trickling out of Cyprus it would have been an extremely quiet Friday. The one exception was the ratings warning on the UK from Fitch. That sent cable down a half cent to 1.5190 but it slowly retraced all the losses in a positive sign for GBP.

Just in time of the weekend, Cyprus spokesman says in final stretch of talks

Posted: 22 Mar 2013 12:58 PM PDT

Cyprus has provided a full week of drama and a stark lesson to the entire world on the perils of sovereign debt.

Cyprus parliament to meet tomorrow on deposit levy – CYBC

Posted: 22 Mar 2013 12:44 PM PDT

The government will have talks today with the IMF and vote on 9 bills, according to state-run TV.

They can pass 100 bills but if they don’t pass a deposit levy or find another way to raise about 6 billion euros, then it’s all over.

Update: There are reports in the Greek press about deposit levies hitting 20-25% on accounts greater than 100K euros.

Update 2: After votes tomorrow, Cypriot politicians will head to Brussels.

COT report: AUD longs back in fashion

Posted: 22 Mar 2013 12:40 PM PDT

Futures market speculative positioning data from the CFTC as of the close on Tuesday:

EUR net short 44K vs short 25K prior
JPY net short 80K vs short 94K prior
GBP net short 61K vs short 50K prior
AUD net long 54K vs long 7K prior
CAD net short 65K vs short 53K prior
NZD net long 12K vs long 19K prior
CHF net short 10K vs short 13K prior
US Dollar Index longs at 54K vs 32K prior

It doesn’t take much to inspire the market to pile into Australian dollar longs. We saw yen shorts trimmed back this week, which is a good sign if you’re thinking of buying USD/JPY at these levels.

The market got excited about the drama in Cyprus but anyone holding a euro short since Tuesday is starting to feel a bit of a squeeze.

Colombia cuts rates 50 bps to 3.25%

Posted: 22 Mar 2013 12:02 PM PDT

The central bank was expected to cut rates by 25 bps to 3.50%. Central bank President Uribe says the economy is growing below potential.

Lebanon’s Prime Minister resigns

Posted: 22 Mar 2013 11:42 AM PDT

Prime Minister Najib Mikati has resigned, according to Reuters. The Wall Street Journal has more details.

Mr. Mikati’s resignation came as a result of a disagreement with the cabinet over extending the mandate of the Internal Security Forces Chief Maj. Gen. Ashraf Rifi.

He has been Prime Minister on two separate occasions.

Cyprus lawmaker Neofytou says important steps taken to positive outcome – BBG

Posted: 22 Mar 2013 11:32 AM PDT

There is one outstanding issue on deposits
Parliament to meet on three bills
Three bills are: capital controls, solidarity fund and Cyprus Popular Bank
Parliament to meet shortly

I never like to hear ‘one outstanding issue’ because something small could derail the whole deal but it certainly looks like it’s moving in the right direction.

Staring at the wires, waiting for headlines on Cyprus

Posted: 22 Mar 2013 11:04 AM PDT

That has been the name of the game this week.

Troika pushing for 15% deposit levy – MNI

Posted: 22 Mar 2013 10:29 AM PDT

MNI is reporting that a government official speaking outside Parliament said the Troika wants a 15% deposit levy on deposits in Cyprus. Asked if the government accepted the demand, the official said that government is still examining different numbers and scenarios — that’s not exactly a sound rejection.

The initial plan was for a vote at the top of the hour but that looks highly unlikely. At this point, a resolution before the market close looks like a longshot.

It looks as though a deal is coming together but you never know until the votes are counted. The risks for the euro go both ways; we could see selling on the lack of certainty headed into the weekend but speculators could also buy on the anticipation that a deal will get done before markets re-open Monday.

Fitch submarines pound by placing UK on Ratings Watch Negative

Posted: 22 Mar 2013 10:04 AM PDT

Fitch places UK on ratings watch negative
See ‘heightened probability’ of downgrade in near term
Expects to complete its review of the UK’s rating by the end of April
Ratings Watch Negative reflects the latest economic and fiscal forecasts from the OBR
Forecasts indicate govt debt will peak later and at a higher level than previously expected by Fitch
Full text of the statement

Cable immediately dropped a half-cent to 1.5191 but has bounced to 1.5219. I think you can pretty much take it to the bank that Fitch will downgrade the UK.

Bersani to hold meetings in attempt to form government

Posted: 22 Mar 2013 09:46 AM PDT

Italian President Napolitano asked Bersani to see if there are the conditions to form a government. Bersani responded, saying he will immediately begin meetings with other parties to see if he can form a government. He said he’s determined to form a government that can bring necessary change and reforms.

Cyprus parliament will convene today – CYBC

Posted: 22 Mar 2013 09:36 AM PDT

State-run TV channel CYBC says Cyprus’ parliament will convene today.

I take that as another sign that a deal is close.

European equity close: Holding pattern

Posted: 22 Mar 2013 09:32 AM PDT

UK FTSE +0.1%
German DAX -0.2%
French CAC -0.1%
Spain IBEX -0.2%
Italy MIB +0.7%

Troika wants more money from Cyprus – MNI

Posted: 22 Mar 2013 09:15 AM PDT

The Troika says conditions have worsened and wants the new bill to reflect that. They are now asking Cyprus to raise 6.7 billion euros compared to 5.8 billion originally.

The headlines are a bit ambiguous but it sounds like the government has agreed with the assessment and will table changes.

Overall, it’s another wrench in the plan but politicians appear to be coming around. Separately, Reuters is running a headline saying that a levy on bank deposits is ‘clearly on the table’ citing the finance minister.

Revisions to US industrial production

Posted: 22 Mar 2013 09:02 AM PDT

The Fed has revised its industrial production numbers.

In February, production was boosted to +0.8% from +0.7% but production for all of 2012 was revised lower to 3.6% from 3.7%.

This changes only matter to the wonks, not the markets.

Cyprus ruling party cautiously optimistic on deal

Posted: 22 Mar 2013 08:55 AM PDT

The leading political party says it is close to a solution on the bailout crisis that is within EU rules, according to CNBC. They see ‘cautious optimism’ in the next few hours.

Cable jumps to one-month high

Posted: 22 Mar 2013 08:30 AM PDT

GBP/USD is trading at the highest since Feb 22 as it piggybacks on the latest round of euro strength.

The pair is testing downtrend resistance from the decline since the start of the year.

Offers from 1.5245/60 and more ahead of 1.5280 and 1.5300.

The original plan for Cyprus is back on the table – FT

Posted: 22 Mar 2013 08:02 AM PDT

A return to the outlines of the original plan, which called for a levy on all bank deposits, is among the options being discussed, according to the FT.

"There was some discussion of going back to the original plan of a bank levy, but there are objections from the [Cyprus] central bank," said one person with knowledge of the talks.

Other details here.