By Mario Sant Singh

THIS week, euro-zone finance ministers will gather in Copenhagen to discuss ways to strengthen the region's financial firewall.

The goal is to establish a massive bailout fund that would combine the European Financial Stability Facility (EFSF) with the system designed to replace it, the European Stability Mechanism (ESM).

The EFSF, which is due to expire next year, currently has 440 billion euros (S$734 billion). It has 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, which would have a fresh war chest of 500 billion euros.

That would take the entire bailout fund to about 750 billion euros.

However, one country could still derail the plans of the euro- zone finance ministers: Spain.

Ahead of the meetings, Italy Prime Minister Mario Monti warned that Spain could reignite the European debt crisis, saying that it "hasn't paid enough attention to its public accounts".

Spain's 10-year bond yields have been climbing steadily in the last three weeks, coming in at 5.39 per cent last week.

TOP NEWS THIS WEEK

Canada's month-on-month GDP figures, on Friday. I expect them to come in at 0.2 per cent (they were previously at 0.4 per cent).

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 prices are moving within 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 two targets on this trade. First profit is taken at 82.24 and the final position is at 81.84.

myp@sph.com.sg

Entry Price= 82.64

Stop Loss= 83.04

1st Profit= 82.24

2nd Profit= 81.84

The writer is the founder and CEO of FXI Academy, which conducts lessons in forex trading.

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