USD Trading Outlook (10-02-2014)

Currencies

• The euro (EUR) remained just below resistance at 1.3626 against the dollar after Friday’s Non-Farm Payroll release. The pair has risen sharply at the end of last week from 1.3505 to 1.3638 as the US showed poorer than expected jobs growth.
• The US dollar (USD) currently at 102.38 against the Japanese yen (JPY) has recovered all its Friday losses. The dollar managed to recover more than the 100 pips it lost on Fridays’ NFP release.

Equities

• US equities continued to rise over the past week even as employment growth in the US remains anaemic, the US500 (SPI) has yet to move above resistance at 1791.

Commodities

• Energy prices are moving higher with Brent Crude (BRT) picking up speed. The energy rose to 109.65, a four week high, before correcting slightly lower at 109.17.

Mover & Shaker with forex options

• Gold (XAU) shows signs of strong advance as the dollar weakens. The precious metal overcame 1273 touching 1275 at the start of the week as investors reduce their risk appetite and go into safe haven assets.
• Options traders may consider constructing a Bull Call Spread on Gold if they expect the precious metal to move higher.

A Bull Call Spread can be constructed by purchasing an at-the-money Call and selling an out-of-the-money Call.