USD Trading Outlook (05-02-2014)

Currencies

• The euro (EUR) range bound between the levels 1.3492 and 1.3538 against the US dollar (USD). The single currency consolidates after dropping by almost 300 pips just before the end of the month and ahead of the ECB press conference scheduled for tomorrow.
• The British Pound (GBP) rose around 100 pips yesterday and rebounded from its six month low at 1.6255 up to 1.6343 against the US dollar (USD) and formed its new resistance. The UK services PMI are on the calendar for today, due at 09:30 GMT, anything higher than the expectations may drive the pair higher.

Equities

• The US equities faced the worst loss since June as investors are assessing the corporate earnings along with the data. In particular, the US 500 (SPI) slumped from 1781 down to 1731 reaching its four month low.

Commodities

• WTI crude (OIL) rebounded from its low at 96.25 all the way up to 97.85 US dollars per barrel. Crude oil rose on speculation that the US crude oil stockpiles will be reduced due to the cold weather in the country. Look out for the crude oil inventories release today at 15:30 GMT.

Mover & Shaker with forex options

• Gold (XAU) slid from its weekly high at 1266 down to 1247 US dollars an ounce. The precious metal swings between losses and gains ahead of the US ADP Non-Farm payroll due at 13:30 GMT and forecasts show of 191K additional jobs in the US.
• Options traders may consider constructing a Long Straddle on XAUUSD and benefit from a move in either direction.
• A Long Straddle can be constructed by purchasing an at-the-money Call and Put on gold.