ForexLive Asia wrap: Monday morning madness the fallout from ECB/Cyprus government cash grab

Weekend news of the ECB/Cyrus bail-out deal As it stands, deposits in Cypriot banks below 100,000 euro will be taxed at 6.7% Deposits over 100,000 euro will be taxed at 9.9% Some talk that negotiations are underway to change these percentages to 3% and 12.5% respectively In return for forfeiture of their money (referred to as the ‘Stability Levy'), depositors will receive bank equity Corporate tax to jump from 10% to 12.5% An emergency parliamentary sitting to vote on the package was scheduled for Sunday, but has been postponed to Monday Monday is a pre-existing bank holiday, and Tuesday has been declared a bank holiday. There is talk Wednesday could be declared a bank holiday too. Cypriot people queued at ATMs to withdraw cash over the weekend so as to avoid some or all of the tax Moody's said the bail-out has negative credit implications Chinese Premier Li plans for 7.5% economic growth per year through to 2020 Euro Finance Ministers Grant Ireland, Portugal Eased Debt Terms New Zealand Q1 Westpac Consumer Sentiment 110.8 (vs. 111.1 prior) China February home prices up 2.1% The news over the weekend and into Monday morning was the ECB/Cypriot government seizing a portion of bank deposits (in exchange for equity in the banks). Cyprus is a tiny country, the numbers of people affected small by comparison with Europe's population, but it was the method – the skimming of cash from people's bank deposits that sent a chill through the markets. The reaction was swift, EUR/USD gapped from around a 1.3050 close in North America on Friday a hundred points lower and continued down to below 1.2900 before finding some support. The bounce was very limited though, it sits around 1.2910 as I type, awaiting Europe's entry into the marketplace. USD/JPY gapped lower too, trading just above 94.00 before retracing some of the gap toward 95.00 and settling around 94.60/70 into the afternoon. AUD and NZD, too opened lower before sitting in narrow ranges for the rest of the session. GBP/USD found support again below 1.5080. Gold gapped a little higher in the early morning but retraced most of its gains to be just below $1600 as I write.