Cyprus Looks onto Bigger Depositors

The market is fixated on the wrangling and hang wringing over the deposit levy in Cyprus. The euro continued to close the opening gap but is vulnerable to headline risk. After Europe goes to bed the market will shift to Shirikawa's departure from the BOJ. Sticking with the 2 existing EURUSD trades alongside 1 GBPUSD, 1 EURAUD, 2 USDJPY and gold. More on these from the latest Premium Insights

Fears of bank runs outside Cyprus never materialized on Monday and European finance minister held a hasty teleconference to minimize the damage. A statement from the call urged Cyprus to exempt account holders with less than 100,000 euros while maintaining the 5.8B euro target.That would mean a 15.6% tax for larger accounts but would be far more acceptable to the public. A formal proposal has not yet been made but a vote is scheduled for Tuesday.

Throughout the crisis many politicians have been pinned into a corner by circumstance and the knee-jerk reaction is to defeat the new laws initially. This is a ploy for voter sympathy and could generate a buying opportunity before the law passes on the second attempt.

Outside of Cyprus, news was quiet. The lone indicator was the US NAHB home builder sentiment survey. It fell to 44 compared to 47 expected. Given that most housing indicators have been upbeat, it's too early to fret.

The Asia-Pacific calendar includes the 0030 GMT publication of the minutes of the March RBA meeting. Early in the session, the RBA's Lowe said the country must accept the strong AUD.

At 0530 GMT, Japan releases department store sales figures for Tokyo and nationwide. In January, national sales rose 0.2%.

Markets say goodbye to BOJ Governor Shirakawa at 0630 GMT as he holds a farewell press conference. Ultimately Shirakawa will be remembered for his failure to defeat deflation but overall he was a solid central banker. The outcomes of the financial crisis, Fukushima disaster and constant political turmoil would have been much worse without his steady leadership.