Bell FX Currency Outlook: The Australian Dollar has recovered in overnight trade as markets digest the situation in Cyprus and look forward to today's release of RBA minutes from its March 5 board meeting.
The decision of the Cyprus government to increase taxes even on bank deposits spooked depositors comprised mostly of British expats. Markets reacted negatively.
Australia: After a somewhat volatile session in Asia yesterday, the AUD recovered back above the 1.04 level overnight, helped by a recovery in the EUR and optimism over today's RBA minutes.
Although the RBA did keep the cash rate unchanged at 3.0% at its March 5 meeting, an optimistic outlook is anticipated by the market following last week's solid employment figures.
Official job numbers showed a 71,500 increase in total employment in February. Spot gold also helped the AUD overnight as
traders looked for a safe haven trade amidst the worries in Europe.
Markets are expected to trade sideways today as it waits for the parliamentary resolution of Cyprus's banks deposits policy (expected tonight).
Majors: The EUR has recovered off 14-week lows overnight on hopes that Cyprus can revise a deal for a bailout of the nation's financial system.
As the plan headed for a parliamentary vote on Tuesday, Cypriot officials made changes to the terms of the rescue plan, trying to making it more palatable to lawmakers and voters.
Originally it was thought that small depositors in Cyprus would be severely penalized, however they are now saying that his is not the case and this has alleviated some of the concern.
The vote was to take place last night but it has now been delayed until tonight with banks in Cyprus now not re-opening until Thursday.
If they can get this through then there is a very good chance that the crisis will be contained and we won't see it spill over into other European countries such as Greece and possible Spain and Italy.
In the US, equity markets reacted negatively to the Cyprus bailout plan with the Dow falling more than 100 points at the start of the session. It managed to recover through the day however it retreated lower towards the close.
19 MAR AU RBA's Debelle Speaks at DCM Summit in Sydney
AU RBA's Lowe Speaks to Australian Industry Group
AU RBA's Policy Meeting - March Minutes
EU ECB's Weidmann and Knot speak in Frankfurt
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