First, the good for the euro area. At long last, Greece has gotten it EUR 30-odd bln, buying them at least another six months before coming back for a drink from the European fountain. A framework for a single European banking regulator was agreed as well, but that won’t come into force until 2014.
Now the bad. Progress toward closer budget integration has ground to a halt. That has been punted to the June EU summit. Same for the issue of dealing with the toxic assets on the balance sheets of Irish and Spanish banks.
And now the ugly: Cyprus. Today we were told that Cyprus is in worse financial shape than Greece. I did not think that was even possible. Good thing for the euro group that Cyprus is ta small enough economy that the euro area can properly bail it out so the odds of contagion from Cyprus are pretty remote.
Here we sit at the top of recent ranges on very little good news for the euro zone. Positions being covered is the catalyst. It remains to be seen if we carry on or if protection of 1.3200 barriers can hold the line. We do have a whiff of panic in the market at the moment, so I would be very reluctant to trade this market from the short-side. We could have further to run.
