USD Trading Outlook (06-12-2013)

Currencies

• The euro (EUR) moved higher after Mario Draghi’s conference and is now range bound around 1.3666 against the dollar. The euro may reverse yesterday’s gains should stronger employment data come from the US. The Fed may consider tapering sooner if unemployment shows strong signs of decline.

• The US dollar (USD) has corrected some losses against the Japanese yen. The pair moved to 102.12 ahead of today’s Non-Farm Payrolls release. A stronger dollar may emerge should a number come out greater than 180 thousand this afternoon.

Equities

• The US 500 (SPI) has ended weaker, two days after the ADP NFP release on Wednesday. The index is currently trading just above 1787 and is expecting the release of the upcoming Non-Farm employment change for future direction.

Commodities

• WTI Crude (OIL) is currently ranging at 97.30 dollars per barrel. The crude may test resistance at 97.95, alternatively, support lies at 97.00 and 96.30.

Mover & Shaker with FX Options

• Gold (XAU) may experience wild volatility on the Non-Farm payroll release. The precious metal is currently settled at 1229.

• Option traders may consider constructing Long Straddle Strategies on Gold to capitalise on higher volatility this afternoon.

• The Long Straddle is constructed by purchasing an at-the-money Call and an at-the-money Put option on Gold, and may prove profitable if the metal’s price moves significantly higher or lower.