This week, Eurozone finance ministers will gather in Copenhagen for talks. The main agenda will centre upon strengthening of the region’s financial firewall.
The goal is to establish a massive bailout fund that could combine the European Financial Stability Facility (EFSF) and the system designed to replace it, the European Stability Mechanism (ESM).
The EFSF, which is due to expire next year, has a current total of 440 billion Euros.
It has since disbursed 192 billion Euros in three separate bailouts to Greece, Ireland and Portugal.
Under the current rules, the unused funds would be passed on to the ESM. The ESM itself would have a fresh war-chest of 500 billion Euros available for future use.
This would bring the entire bailout fund to about 750 billion Euros.
Besides increasing the size of the firewall to shield contagion, the European Commission is hopeful that the larger fund itself will encourage countries like China and the US to put up more money for the IMF.
Olli Rehn, the European Union economic affairs commissioner, said there was “no room for complacency” and urged the Eurozone “to conclude the comprehensive crisis response by reinforcing the euro area financial firewall”.
There is one country which could derail the plans of the Eurozone finance ministers – Spain.
Ahead of the meetings, Italy’s Prime Minister Mario Monti warned that Spain could reignite the European debt crisis, saying that Spain “hasn’t paid enough attention to its public accounts.”
As it is, Spain’s 10-year bond yields have been steadily climbing for the last three weeks, coming in at 5.39% last week.
Things are also not looking good for Spain Prime Minister Mariano Rajoy, who is struggling to reduce the country’s budget deficit in the face of a looming recession. Come 29th March, he would be facing his first general strike, as unions protest against changes to employment laws.
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Canada GDP m/m.Friday, 30th March, 8.30pm. I expect figures to come in at0.2% (previous figure was 0.4%).
Trade Call
Short CAD/JPY at 82.64
On the H1 chart, CAD/JPY has been on a steady downtrend – falling from a high of 84.96 to a low of 81.85 – a move of over 300 pips in just one week.
Current price movement is in a range, with Resistance located at 83.00 and Support located at 81.85. The bias is for us to go short.
We will go short once prices fall to 82.64. A protective stop of 40 pips is placed above the entry price, which is located a few pips above the Resistance level of 83.00.
We will have 2 targets on this trade. First profit is taken at 82.24 and the final position is exited at 81.84.
Entry Price = 82.64
Stop Loss = 83.04
1st Profit = 82.24
2nd Profit = 81.84
Stop Loss = 83.04
1st Profit = 82.24
2nd Profit = 81.84
(Source: MarioSingh.com)
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