USD Trading Outlook (20-01-2014)

Currencies

• The euro (EUR) continued its decline touching its two month low at 1.3507 against the US dollar (USD). The single currency tumbled against the greenback as better US data designate the developments of the US economy. The US dollar strength indicates that the Fed may continue the reduction of its stimulus measures as we go along the year.

• The US dollar (USD) declined below its support at 104.20 down to 103.85 against the Japanese yen (JPY). The yen appreciated against its counterparts as the Asian stocks have dropped due to slower economic growth in China.

Equities

• The EUR 30 (DAX) skyrocketed up to its record high at 9797 on Friday. The index showed its biggest weekly increase during the month as the volume of shares traded rose 60% above the average this month.

Commodities

• WTI Crude oil (OIL) fall from its three week high at 95.04 down to 93.80 US dollars per barrel. Oil prices dropped after data showed slow industrial output in china, which is the second biggest oil consumer in the world.
  

Mover & Shaker with FX Options

• Gold (XAU) rallied by gaining more than 30 US dollars within one week and reached its six week high at 1261 US dollars an ounce. The precious metal rose as there is an increasing demand for metals and we may see gold trading even higher in the short term.

• Options traders may consider constructing a Long Straddle on Gold and capture the upside potential if they expect that gold may continue its rally.

• A Gold Straddle can be constructed by purchasing an at-the-money Put and an at-the-money Call on gold.