USD Trading Outlook (21-03-2013)

The euro (EUR) edged higher against the US dollar (USD) after dropping on news of the Cyprus bailout in which small depositors would be hit by a 6.75% tax on their deposits. The pair is currently trading above 1.2945 as it looks like the markets have absorbed the news and fears of contagion to Spain and Italy have to an extent subsided. Of course the Cypriot parliament will vote on the measure this afternoon and a negative vote will bring a Eurozone member closer to bankruptcy.

• The Australian dollar (AUD) was pulled lower against the US dollar (USD) as the pair fell from a previous high of 1.0405 to 1.0380.
• Gold (XAU) moved higher against the backdrop of the Cyprus bailout and a hit on depositors in a member of the Eurozone. The precious metal continues its bullish ride trading above 1604.
• The GER 30 (DAX), which tracks Germany’s 30 largest corporations, edged above 8010. The move comes after correcting for opening lower yesterday amid news of the Cyprus bailout.
• Weekly option volatilities for the EURUSD eased from 11.50 to 10.40 as investors’ fears subside and push options’ premiums slightly lower.

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