Here's my summary of the key news overnight in 90 seconds at 9 am, including news that China and Brazil have signed a US$30 bln currency swap deal, which they say will safeguard against any future global financial crisis.
At the same time the IMF reported that central banks in developing countries sold US$68 bln of euros in 2012 cutting their holdings of the currency by 8%. The US dollar grew its share of allocated foreign exchange reserves among all countries; but although still small, holding of 'other' currencies also grew.
And, Australia may seek a deal enabling direct conversion of Australian dollars into Chinese currency when their prime minister visits China later this week.
Many nations are lining up to be the first to do this, and when it happens there may be an even faster shift out of euros as a central bank reserve currency, and even a shift away from the US dollar. But the Chinese first need to act like a reserve currency manager, and full free floating convertibility is a baseline.
In the US, the final data on Q4 2012 GDP came in a little stronger than previously reported. Q1 2013 looks like it started out well. And the S&P500 ended last week on an all-time high, although a pull-back is expected in the coming week.
In Europe, the true nature of the Cyprus deal on their citizens who have more than €100,000 in their biggest bank is becoming clearer. Customers will have 37.5% of their deposits above this amount converted into shares with full voting rights and access to any future Bank of Cyprus dividend, the Nicosia-based central bank said in an e-mailed statement. A further 22.5% will be temporarily withheld to ensure the lender meets the terms of its recapitalisation, as agreed under Cyprus’s loan agreement with international creditors, they said. That represents a potential loss of 60%, rather than the 40% previously reported.
In China they are making new efforts to cool housing speculation with some big cities imposing outright bans on certain types of sales, and others enforcing capital gains taxes.
Tomorrow we will get to the Chinese PMI reading for March, and later the US and Australian data for the same series. Positive news is expected from China and the US at least
The Kiwi dollar starts the week basically unchanged at 83.6 USc, 80.3 AUc, and the TWI is up at 76.9.
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