USD Trading Outlook (24-01-2014)

Currencies

• The euro (EUR) made a rally yesterday and gained more than 160 pips against the US dollar (USD). The single currency skyrocketed reaching its monthly high at 1.3705 after better than expected manufacturing and services came out from Eurozone.
• The US dollar (USD) slid from its weekly high at 104.83 down to 102.96 and declined more than 180 pips against the Japanese yen (JPY). The pair dropped down to its three week low ahead of next week’s FOMC meeting. Data from US are disappointing, pointing slower economy than anticipated.

Equities

• The European stocks fell and the UK 100 (FTS) dropped down to its three week low at 6708. The index was influenced from the manufacturing reduction in China and is now trading around the level of 1730.

Commodities

• WTI Crude oil (OIL) continues the rally for another day rising more than 6 US dollars within two weeks. Crude oil advanced after reports showed that the US distillate fuel stockpiles declined and the oil is now trading near its resistance at 97.80

Mover & Shaker with forex options

• The Australian dollar (AUD) tumbled down to 0.8688 against the US dollar (USD) and hit its lowest level since July 2010. The aussie fell after the nation’s three year bond yield declined. Also, China’s bank regulator stated that will take measures in order to protect the credit risk arises from the coal-mining industry. Those two stories drove the aussie lower.

• Options traders may consider constructing a Bear Put Spread on AUDUSD and benefit from a possible continuation of the bearish trend.
• A Bull Call Spread can be constructed by purchasing an in-the-money Put and selling out an out-of-the-money Put on AUDUSD.