USD Trading Outlook (06-02-2014)

Currencies

• The euro (EUR) advanced more than 60 pips reaching at 1.3554 before retracing back to 1.3518 against the US dollar (USD). The single currency remains bearish ahead of the ECB press conference today and after data show slower inflation across the Eurozone.
• The British Pound (GBP) dropped down to 1.6250 before its rebound by gaining more than 80 pips against the US dollar (USD). The UK services PMI came out worse than expected and drove the pair lower, but the unexpected lower US ADP helped the cable to erase part of its losses. Looking at the calendar the UK asset purchase facility due at 12:00 GMT.

Equities

• The US 500 (SPI) rebounded from its four month low at 1731 all the way up to 1750 and fluctuates ahead of the US NFP due tomorrow.

Commodities

• WTI crude (OIL) rose up to 98.23 US dollars per barrel, after the energy information administration showed yesterday a decline of the US stockpiles of only 0.4 million barrels. The crude oil is now trading around 97.60.

Mover & Shaker with forex options

• Gold (XAU) skyrocketed from 1247 all the way up to 1274 US dollars an ounce and gained more than 25 US dollars, after the US ADP Non-Farm Payrolls recorded only 175K additional jobs. After that, the metal slumped back to 1256 where is now trading. The US ADP is considered as an early indicator for the US Non-Farm Payrolls due tomorrow.
• Options traders may consider constructing a Long Straddle on XAUUSD and position themselves before the major event of the month.
• A Long Straddle can be constructed by purchasing an at-the-money Call and Put on gold.