Forex Flash: EUR weakness unable to abate – Deutsche Bank

FXstreet.com (Barcelona) - In his recent interview with the Financial Times and Reuters, Mr. Dijsselbloem said he was effectively “pushing back the risks” that sovereigns or EU authorities would be left to shoulder the burden of bank bailouts. He added that the relative market calm in recent months, coupled with the lack of market panic following the decision to force depositors to pay for the bailout of two large Cypriot banks, allowed the Eurozone to go after private money more aggressively when banks failed.


According to Macro Strategy Analysts J. Reid and C. Tan at Deutsche Bank, “The market reaction prompted a clarification statement later where Dijsselbloem said that Cyprus was a specific case with exceptional challenges and that bailout programs do not have models or templates.”

However by then the earlier message had done the damage with equities and the Euro falling sharply. Indeed the cat has been increasingly let out of the bag over the last week concerning the potential for different ways of resolving future bank/sovereign crisis and these comments yesterday added to the risk than nothing is going to be off the table when it comes to any future issues for the banking sector.