USD Trading Outlook (08-01-2014)

Currencies

• The euro (EUR) dropped down to 1.3596 and lost almost 60 pips against the US dollar (USD), after worse than expected inflation data came out from Eurozone. The single currency remains on a bearish trajectory and is now trading around 1.3627 ahead of ADP non-farm payrolls due at 13:15 GMT.

• The US dollar (USD) climbed from its two week low at 103.90 all the way up to 105.00 against the Japanese Yen (JPY). The pair is heading towards higher highs and looking ahead the FOMC meeting minutes will take place today at 19:00 GMT.

Equities

• The GER 30 (DAX) rose from 9375 up to 9525 after German unemployment revealed better than expected. The German economy shows that is recovering and indicate confidence for the European economy. Additional data are coming out from Germany and the monthly German factory orders will come out today at 11:00 GMT.

Commodities

• WTI crude (OIL) rebounded from its monthly low at 93.19 up to 94.18 US dollars an ounce. The crude oil price advanced on speculation that crude oil stockpiles shrunk from previous week.

Mover & Shaker with FX Options

• The US dollar (USD) skyrocketed all the way up to 1.0808 reaching its two and a half years high against the Canadian dollar (CAD). The Canadian dollar weakened after its monthly trade balance came out worse than expected whereas at the same time the US trade balance showed improvements.

• Options traders may consider constructing a Bull Call Spread on USDCAD and capture a possible upside potential.

• The bull call spread can be constructed by buying an in-the-money Call and selling out an out of the money Call in order to reduce the cost of constructing the bullish position.