Good Morning Traders

We touched on some of the major news that took place yesterday in our evening market update last night, but we will cover the over night developments in this mornings blog. It looks like all eyes will be on Cyprus again today as the Euro-area finance ministers have told Cyprus to raise €5.8bn from bank deposits. As we all know the suggested tax levy has lead to drastic protests within Cyprus and residents seem to be very unhappy with the current proposals which can be seen below:
Cyprus Proposed Deposit Tax
Deposits < €100k subject to 3% tax
Deposits €100k- 150k subject to 10% tax
Deposits > €150k subject to 12% tax.

The Cyprian lawmakers have been given until 4pm today to vote on how they plan on spreading the burden. There has been speculation that depositors will be compensated with income from the sale of government owned gas. As traders we take a look at the market reaction to the news and put it into relative context, Cyprus accounts for less that .25% of the Euro areas GDP, so the market reaction yesterday I believe was more due to the prospect that this tax could be imposed somewhere more serious. eg. (Spain, Italy, Greece, Ireland). It is important that depositors are protected to calm the shock waves rippling through the euro area today. In terms of market reaction to the news we saw a pull-back in the EURUSD as it traded under the 1.29 handle we are currently trading up above this level but the pair has been relatively quiet since the Cyprus news yesterday and we don't expect to see much volatility until further news is released in relation to the proposed deal. 
In terms of the equity markets in the US this 'Cyprus Sell-Off' was seen as a genuine buying opportunity for US investors attracted by these cheap levels, with the SPX trading down around the 1545 handle. As we have seen over the past few weeks there has been increased talk and discussion about the correction and the fact that the markets are overbought, while I do agree with the above I think we are going to need something significant to drag us off this top. It is in my opinion going to be something a little bigger than Cyprus, but we have come a long way in a short period of time so the longer we stall at these levels the more nervous investors become and we would expect to see some profit taking. 
I would just like to draw you attention to two interesting charts that have caught my eye this morning. The first is GBPUSD the GBP has lost its relative strength against its major pairs but most notably the USD. Tomorrow we will see the UK budget released and this could really move the pair. We had previously advised that we have been waiting on a retracemenet back to the 1.52 level before shorting the pair and we are nearly there at the time of writing. We would see a short term price target of 1.45.

The next thing that I have been keeping a close eye on is $AAPL up $12 in yesterdays trading session. This has been its largest gain since it began descending off its $700 top. It managed to close above the $455 level which was very significant for traders as the equity was well supported into the close. This level will be seen as a support level and it will be interesting to see if the stock can add to gains in today's trading session. Also it is important for traders to be aware how significant as a core component driver to the SPX, so if you see AAPL making a move to the upside don't be surprised to see the SPX making gains.

Happy Trading
@lowkeycapital