22.03.13 Friday Morning

We are pleased to announce we have fixed and reduced some of our key FX spreads.

Spreads for EUR/USD and AUD/USD markets have been fixed at only 1 point when out of hours and spreads for EUR/JPY and GBP/USD markets have been reduced to only 2 points as well as been fixed even out of hours.

For more information, please refer to the market information under Range of Markets. 



Global equities remained under pressure all week with little market direction. Developments in Cyprus have played on investors’ minds as parliament battle to come up with a bailout deal. A Cyprus bailout proposal over the weekend initially sent bond yields jumping and the Euro was initially hit hard on Monday, falling to a three-month low. The proposal included an unpopular levy on all bank deposits. Russian equity markets were also hit hard on Monday due to their deep financial ties with the Island. Concerns continued throughout Asia with investors piling into the Yen as a safe heaven, impacting Japanese stocks.

Tuesday saw European markets open lower, extending Monday’s losses. Investors remained cautious ahead of a parliamentary vote which eventually saw officials vote against the one-time bank levy on bank deposits. Inflation data from the UK showed the consumer price index rose 2.8% and US Housing data came in in-line with market expectations.

Stocks initially turned positive Wednesday as investors favoured the rejection of the proposed bank levy, with 36 of the country’s 56 parliamentary deputies voting against the proposal while 19 abstained. The vote against the proposal was seen as market positive as it will reduce the risk of a potential bank run. Comments from the European Central Bank contributed to positivity in the market as it was hinted they would continue to support Cyprus.

Talks between the Cypriot Minister of Finance Michael Sarris and Russian counterpart Anton Siluanov discussed Russian financial aid for the nation which was deemed very constructive, although both parties failed to come up with a potential deal. Despite the positive news, the FTSE struggled to maintain its gains after a detailed budget report from George Osborne saw yearly growth forecast halved; forcing Osborne to admit that further assistance will be required.

European markets were hit hard on Thursday after the ECB set a deadline for a Cyprus bailout deal. If a deal was not done by Monday, the ECB would cut emergency liquidity support to Cyprus banks. A bulk of worse than expected economic data also fed the bears with French and German PMI coming in below expectations. The UK saw better than expected Retail Sales but failed to spur on investors appetite for risk.

With a holiday-shortened next week, Cyprus is likely to dominate financial headlines after the European Central Bank imposed a Monday deadline. Despite the continued uncertainty in Europe, the market has managed to keep relatively resilient with the Dow Jones still managing to print 2 points away from the all-time high.

It is worth remembering that investor’s main concern when analysing the market centres around the state of affairs in the U.S, the world’s leading economy.  This week a better than expected Philly Fed Manufacturing Index along with impressive unemployment claims has added to the recent wealth of positive data out of the states.

With Ben Bernanke expected to speak this coming Monday at 5:15pm GMT, investors will be scrutinizing his words for subtle clues regarding future monetary policy. If his tone is more hawkish than expected, we could see the dollar rise further against its rivals.

Stock of the week – Eurasian Natural Resources (ENRC)

A month ago, ENRC was a hot stock with investors pilling in on bid rumours. However, the stock has seen continued selling pressure as investors start to unwind their positions as takeover talks fade. They reported earnings on Wednesday which saw the stock open up a couple of percent higher, then soon slipped back into the red. The share price has fallen 12.75% over the last week.  

Next week, investors will have a variety of economic data to wrestle with. The first of which comes from the Eurozone on Monday, where investors will receive the verdict as to whether Cyprus is leaving the Euro. There is also a host of data from the Eurozone including retail sales, Germany unemployment change as well as a key Italian 10-year bond auction.

Take a look at our Economic Diary page to keep up to date on the latest economic news