USD Trading Outlook (15-01-2014)

Currencies

• The euro (EUR) dropped on yesterday’s trading session against the dollar. The single currency has fallen from 1.3698 to 1.3635 hinting at a reversal of its bullish run. Look ahead for the European trade balance today for news on the continent’s economy.

• The US dollar (USD) continues to rise against the Japanese yen (JPY) touching 104.41 from 102.87 on Monday. This afternoon, the Purchasers Price Index and the Beige Book release may reinforce the dollar’s direction. Resistance for the pair lies at 105.40.

• The US dollar (USD) is also picking up speed against the Canadian dollar (CAD). The Looney seems to weaken as money flows are reversing favouring the US economy. The pair has broken above 1.0921 to 1.0975 continuing its bullish run.

Equities

• Wall Street worked hard to recover Monday’s losses in yesterday’s session. The US 500 (SPI) rose from 1809 to 1832 as investors drove in to buy on the cheap.

Commodities

• Brent crude oil (BRT) remains on a bearish trajectory breaking below 106.80 down to 105.42. Today’s release of US crude oil inventories could shed some light on the potential for energy commodities.
  

Mover & Shaker with FX Options

• Gold (XAU) had remained range bound beginning the week between 1244 and 1254 dollars. After failing trice to break above resistance, the precious metal has slid to 1238 indicating a return to its long term trend.

• Options traders may consider constructing Bear Put Spreads on Gold and capture any possible downside for the metal in coming weeks.

• A Bear Put spread can be constructed by purchasing an in-the-money Put and selling out an out-of-the-money Put on gold.