Investiční bankovnictví (Komerční banka)
World markets  |  March 21, 2013 08:19:00

Uncertainty about the situation in Cyprus euro does not help

Euro during yesterday's trading erased some of their earlier losses and returned to the border of 1,295 USD / EUR. However, the scope for further strengthening of the common European currency is due to the uncertainty arising from the solution of the Cyprus situation considerably limited. Finance Minister island state extended his stay in Russia, where they try to negotiate support for their country. Today's meeting should be attended by representatives of the European Commission. Markets will be waiting for conditions other suggestions for getting assistance. However, it is clear that negotiations will not be easy. Cypriot banks should be according to recent reports open until next Tuesday.

Attention investors during yesterday turned to the other side of the Atlantic Ocean, where met the U.S. central bank. Ben Bernanke, however, nothing new, and dramatically told.The Fed will continue its aggressive monetary easing through purchases of securities in the amount of 85 billion USD a month. Despite signs of a gradual improvement in the situation the central bank considers the unemployment rate is still at very high risk according to the risk of restrictive fiscal policies of the government and developments in foreign markets.

Nevertheless, we expect the second half of this year, the Fed could proceed to a gradual reduction in the amount of purchased assets, how should the macroeconomic indicators continue to improve, and the full completion of this program should be at the end of this year. Increases in interest rates, however, is not for this year or next on the agenda. It should come up when unemployment falls below 6.5% and inflation expectations two years ahead will climb above 2.5%.Particularly the decline in the unemployment rate below the targeted value will see the first in 2015.

However, during today should be published data confirming the improvement in the labor market. Applications for unemployment benefits should be compared to the previous week, while slightly increase, but they are quite a large margin below 400 thousand. Will there even data from the real estate market in recent months, surprise and superior numbers indicate that this sector of the economy has been through the worst.

From Europe, we will see the purchasing managers index (PMI). As usual in recent months, leading indicators point to a gradual recovery in the next 3-6 months, but unfortunately in the "hard" data yet no signs of better development are not clear.Markets reacted positively in the past to better data these leading indicators, but the markets are starting to generate concerns about whether the recovery is really a coincidence that these data were not very optimistic. Even today, expecting another slight improvement, but the market reaction should be rather minimal.

Author: Miroslav Frayer

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