Euro weakens as unemployment climbs

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Euro/USD fell to 1.2803 as unemployment inside the euro zone fell to a record high 12,5 %. The euro fell against 12 of its 16 most traded peers as unemployment continued to soar in Greece and Spain adding to concern of an even deeper recession. Unemployment in Greece reached 26,7 % with 60 % of the youth without jobs. A mix of lower than expected industrial manufacturing data and unemployment paint a grim picture for hopes of a quick recovery inside the euro zone.

Asian stocks fell before later publication of new US job numbers. The dollar index (DXY) which has fallen for the last days rose 82,920 as gold prices plunged 35 dollars to USD 1567 an ounce. Copper and silver continue to fall while oil prices are steady. New York crude (NYMEX) has been trading above 96 for the whole week and Brent crude above USD 110 a barrel. The European Central Bank (ECB) which along with the EU and International Monetary Fund, IMF, has been strongly criticized for its handling of the Cyprus crisis, meets on April 4th.

As indicated in our Daily Report yesterday Cyprus has started a blame hunt for a crisis running out of hand. Finance Minister Michael Sarris who conducted the bailout negotiations in Brussels and afterwards came empty handed back from Moscow, resigned on Tuesday and was replaced by Labour Minister Haris Georiades. Sarris has for the last year served as President of the Board in the bankrupt Popular Bank of Cyprus, Laiki. Over the last months Laiki received billions of Euros from ECB in emergency funding.

 The use of these funds will be part of a special investigation conducted by three special judges appointed by President Nikos Anastasiades. The judges shall within three months present a report on whom bear responsibility for the crisis. Bank of Cyprus (BOC) and Laiki Bank were till recently regarded as solid profitable national flagships. The two banks have over the last 2 – 3 years lost billions of euro on speculation in Greek treasury bills and unsecured loans to Greek individuals and companies.

President Anastasiades himself came under fire yesterday when it was known that a company headed by his son in law and other relatives presumably transferred 21 million euro out of Cyprus just before the controversial EU decision to raid bank deposits took place. Anastasiades flatly rejected tip-off to close family members or any other wrong doing; “I never knew, and it was never possible for me to wage war until Saturday morning March 16th to avoid what they imposed on us and at the same time supposedly tip-off people”.

Other politicians have received similar accusations which would be subject for the investigations. Even if lose accusations, the tip-off suspicions illustrate what the Cypriot public regards as, too, “cosy” relations between bankers and politicians.

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