USD Trading Outlook


 
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31th January

Currencies

  • A stronger dollar pushed the euro (EUR) lower as the pair moved below 1.3543 in early trading. The single currency may come under stress today as Eurozone price data are released this morning.
  • The US dollar (USD) managed to touch 102.92 against the Japanese yen (JPY), before correcting to 102.47 in early trading. The pair has strong support at 101.99.

Equities

  • UK equities are on a bullish run late this week, with the UK 100 (FTS) at 6505 from 6430 on Thursday. Overall stocks have corrected their all-time highs from 6815 earlier this month.

Commodities

  • WTI crude (OIL) fell from its month high at 98.55 deemed too high for the market. The energy fell to 97.79 in early trading as investors look ahead for a firm correction.

Mover & Shaker with FX Options

  • Gold (XAU) continued to slide after its volatile reaction to the FOMC on Wednesday. The precious metal, currently at 1242 dollars per ounce could slide lower as the dollar strengthens.

  • Options traders may consider constructing a Bear Put Spread on Gold if they expect the precious metal to move lower.
  • A Bear Put Spread can be constructed by purchasing an at-the-money Put and selling an out-of-the-money Put on gold.

30th January

Currencies

  • The euro (EUR) slid to 1.3604 against the dollar as the Federal Open Market Committee (FOMC) announced it will continue as planned to taper 10 billion per month from the 85 billion monthly quantitative easing (QE) programme. This is the second month bringing total monthly QE to 65 billion. The single currency then corrected up to 1.3650.
  • The US dollar (USD) broke lower against the Japanese yen (JPY) touching 101.84 before rising to 102.43 as investors pushed for a stronger yen.


Equities

 

  • European equities are lower led by the GER 30 (DAX). The German index touched 9233.5 before correcting this morning above 9333.5 gaining 100 points.

 

Commodities

 

  • Brent Crude (BRT) remained volatile but keeping in line with economic activity is picking up speed. The global oil benchmark has risen to 107.95 and is looking at testing higher highs after yesterday’s US crude oil inventory release.

 


Mover & Shaker with forex options

 

  • Gold (XAU) proved to be the most volatile instrument in yesterday’s trading session amid the announcement of the Fed statement. The precious metal rose to 1268.72 before dropping to 1256.90 and rising again above 1270.15. The high volatility was beneficial to options traders who capitalised on their premiums. Looking ahead, the precious metal may look at retesting the support at 1250.00 as markets taste the Fed’s tightening of QE.
  • Options traders may consider constructing a Bear Put Spread on Gold if they expect the precious metal to move lower.
  • A Bear Put Spread can be constructed by purchasing an at-the-money Put and selling an out-of-the-money Put on gold.

29th January

Currencies

  • The euro (EUR) continues to slide lower as volatility remains low.  The single currency, now trading at 1.3660 against the dollar had found earlier support at 1.3629. Traders are looking ahead for the Eurozone money supply data release at this morning.
  • The US dollar (USD) has sustained its rise against the Japanese yen (JPY) while pushing even higher. The greenback rose from 102.07 at the beginning of the week to 103.30 this morning. The FOMC statement this evening will remain the highlight of the today’s news as investors will be listening out for the future of US monetary policy.


Equities

 

  • US Tech (NDQ), the 100 largest US tech companies, have rebounded from yesterday’s low of 3476 up to 3519. The index has seen volatility pick up as tech giant Apple missed analyst estimates.

 

Commodities

 

  • Heating oil (HEO) prices continue to rise from 2.9550 to 3.1308 as cold spells flock North America and Europe. While energy prices have remained range bound, the short supply of heating oil has pushed prices higher.

 


Mover & Shaker with forex options

 

  • Gold (XAU) found short-term support above 1250 ahead of today’s FOMC statement. As growth in the US has picked up but not at the required speed, there may be voices of consideration over last month’s announcement by Ben Bernanke to taper quantitative Easing by 10 billion per month.
  • Options traders may consider constructing a Long Straddle on Gold if they expect volatility to pick up.
  • A Long Straddle can be constructed by purchasing an at-the-money Call and an at-the-money Put on gold.

28th January

Currencies

  • The euro (EUR) remains range bound as investors asses future movements. The single currency remains above 1.3681 against the greenback.
  • The British pound (GBP) is rising steadily against the US dollar (USD). The cable looks at testing resistance at 1.6662 as the UK economy pivots to better performance and the Governor of the Bank of England has been proved true in tackling unemployment.


Equities

 

  • European stocks continue to slide from the all-time highs at the beginning of the year. The GER 30 (DAX) has broken below support at 9388 in yesterday’s trading.

 

Commodities

 

  • WTI Crude (OIL) reversed its higher highs for a correction at 95.20 in yesterday’s trading. Energy prices may be driven lower as supply considerations ease.

 


Mover & Shaker with forex options

 

  • Gold (XAU) has found temporary support above 1251 as the dollar continues to weaken. This afternoon look ahead for US consumer data that may shake the pair.
  • Options traders may consider constructing a Bull Call Spread on Gold if they expect gold to rise over the coming weeks.
  • A Bull Call Spread can be constructed by purchasing an at-the-money Call and selling an out-of-the-money Call on gold.

27th January

Currencies

  • The euro (EUR) remained buoyant against the dollar after rising from 1.3530 to 1.3693 before the weekend. The single currency remained range bound since. Today’s events, including the release of US Home sales and German business climate data may act as pivot points for the pair.
  • The US dollar (USD) continues to slide since last week against the Japanese yen (JPY). The pair has fallen from 104.80 to 101.82 before correcting to 102.48. Financial markets are still weary of the 10 billion taper especially as is evident through a weaker dollar.


Equities

 

  • European stocks are on decline after reaching all-time highs at the beginning of the year. The GER 30 (DAX) has fallen from 9802.5 to 9347 over the last two weeks.

 

Commodities

 

  • WTI Crude (OIL) demand has risen over the past week pushing prices higher. The crude oil trades at 96.69, up from 91.40 dollar per barrel less than two weeks ago.

 


Mover & Shaker with forex options

 

  • Gold (XAU) continues to rise since the 19th of December. Throughout the period, the precious metal rose from 1190 dollars per troy ounce up to 1270.
  • Options traders may consider constructing a Bull Call Spread on Gold in case gold may rise over the coming weeks
  • A Bull Call Spread can be constructed by purchasing an at-the-money Call and selling an out-of-the-money Call on gold.


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