USD Trading Outlook (09-12-2013)

Currencies

• The euro (EUR) made a rally gaining more than 200 pips during last week against the US dollar (USD), reaching its high at 1.372. The single currency looks strong against its counterparts and may move even higher this week.

• The US dollar (USD) rebounded on Friday up to 103.22 against the Japanese yen (JPY), after falling to its weekly low at 101.61. The US dollar appears to hold its gains against the yen as there is speculation that the Fed may consider a possible tapering next week.

Equities

• The US equities moved higher and are now trading near its record highs. The US 500 (SPI) rose on Friday after better than expected Non-Farm Payrolls release. The index is now trading above 1807, as investors look more confident about a possible scenario of tapering and the US economy showed signs of recovery.

Commodities

• WTI Crude (OIL) is currently trading near its six week high at 98.00 US dollars per barrel. The energy climbed as China’s net crude imports rose in November and the US economy is improving. The crude oil price may move even higher in the near term.

Mover & Shaker with FX Options

• Gold (XAU) fluctuated on Friday and recorded its five month low at 1211 US dollars an ounce. The precious metal is under pressure as market participants are weighting a possible trim of the asset purchases during this month. On Friday, the US reported more jobs than forecasted, adding 203K additional placements.

• Option traders may consider constructing a Bear put spread on XAUUSD and benefit from a possible continuation of the bearish trend.

• The bear put spread involves the purchase of an in-the-money Put while selling out an out-of-the-money Put option on Gold in order to reduce the cost of constructing the bearish position.