EU Leaders Look To Broker Cypriot Deal

by Phil Moore September 4, 2013

The start of this trading week is likely to be dominated by further news on the Cypriot bailout deal. Whether a deal can be brokered between the Cypriot Parliament and EU leaders will be the biggest factor of market volatility at the start of the week.

It is not yet certain that a deal will yet be made, although there is of course scope that the EU could relax it’s tough initial stance with the indebted country. Perhaps the worst case scenario is that Cyprus ends up leaving the Euro?

Whatever the outcome, this new tough stance from Euro leaders is most certain to be keenly watched by other member states. Particularly as many member states may well be needing to ask for further bailout funds in future…

News elsewhere this week of note is largely centered around the growth of the US economy. Look mid week for continued signs of growth coming from both the Consumer Confidence and Revised GDP figures. Both of these could help both Stocks and the dollar to keep up their current bullish momentum.

Also keep a watch out for the GBP Current Account deficit figures. Given recent poor growth figures in the UK economy this could provide some good opportunities for those trading the markets with binary options this week. Further poor figures may well dampen the recent GBP/USD rally when released on Thursday while a surprise indication of growth will further fuel the rally.

Key News This Week

Monday – EUR- Euro group Meetings
Tuesday - USD - Fed Chairman Ben Bernanke Speaks
Wednesday – AUD - Governor Stevens speaks, USD - New Homes Sales, Durable Goods Orders (m/m), Consumer confidence, Revised GDP
Thursday – GBP - Current account deficit, CAD - Core CPI (m/m), USD - Pending Home Sales
Friday – CAD - GDP (m/m), USD - Unemployment Claims

In Focus - Oil

Oils sideways movement last week left the commodities near term direction in the balance. However the early break of the 23.6 Fibonacci level signals further gains.

Call against 93.77 with a break of 94.82 accelerating near term gains.

Currency Majors

EUR/USD - The pair is testing a falling trend line that has been in place since the end of January. This currently comes in at around 1.3025. A move above this level would open the way for gains to at least the 1.3135 level.
USD/JPY - Having fallen back in recent trading 94.00 looks to provide good support. The trend remains bullish and this could provide a good level to go long.
USD/CHF - The pair has been broadly caught up in a range extending from 0.9566-0.9380 over the past few trading days. Until a firm break occurs beyond these levels in either direction it is advisable to stand aside.
GBP/USD - The pair has bounced strongly from the lows set at 1.4830. Given the recent strength the bias remains in favor of further gains. Above 1.5320 targets 1.5415.

Major Indices

DOW - Further gains for the Index last week with strong support showing at the 14,000 level. Given the recent support expect further gains. A good strategy could be to enter long on any pullbacks to the aforementioned support.
NASDAQ - For another week the Index has been ‘filtering’ with taking out the 2800 level which it has yet to do decisively. A strong move though this level early in the week should see extended gains to 2,900.
FTSE - The pullback on the FTSE is view as a correction given the recent strong gains. However this corrective move is likely to continue. Strong support sits at 6250 from where it is likely the market will bounce.

Commodities

Oil – (See above)
Gold – More gains look likely with the precious metal bouncing from the 1600 level last week. Below this support sits at 1585. Further gains are likely with 1620 and 1635 immediate targets.