Euro Sideways on Easter Holidays, USDJPY Eases on Disappointing Chinese PMI - 1.4.2013

Major currency pairs are trading in sideways as most European and Asia markets are on bank holiday today. The euro against the greenback dropped slightly from Thursday highs at 1.2844 and is fluctuating now around 1.2800. Cyprus Central Bank in an announcement stated that above 100K Bank of Cyprus deposits may incur a loss of 60%. More specifically, 37.5% will be converted into shares, while 22.5% will be temporarily “frozen” and possibly part or the whole of it will be converted into shares should the bank need more recapitalization. Italy’s political gridlock remains for more than a month after elections weighing on the currency pair. Investors are expecting the PMI reports tomorrow for EZ members as well as unemployment report, later this week we expect the ECB monetary decision where ECB may sound more dovish. The USDJPY trades lower this morning at 93.50 amid NIKKEI closed negative by 2.12% on disappointing Chinese Manufacturing PMI that were below expectations, despite that increased from February PMI. In addition Tankan Non-manufacturing Index was lower than projected coupled by Tankan Manufacturing Index also lower than estimated. Ahead of new governor’s, Kuroda’s, first meeting of BOJ at 3-4 April, Yen is likely to remain steady expecting decisions. The Aussie was also influenced by disappointing Chinese PMI and dropped to 1.0385 versus the US dollar as China is Australia’s largest trading partner. Main focus today will be the US ISM Manufacturing Index projected to remain the same at 54.2.