USD Trading Outlook (21-01-2014)

Currencies

• The euro (EUR) advanced from its two month low at 1.3507 up to 1.3567 against the US dollar (USD). On the calendar, the German ZEW Economic Sentiment due at 10:00 GMT, anything higher than the expectations may help the pair to move higher and above its resistance level.
• The US dollar (USD) climbed more than 80 pips on yesterday’s session against the Japanese yen (JPY). The yen dropped after three days of gains and the pair is now trading around 104.50. The US dollar rose on speculation that the Fed may taper on next week’s FOMC meetings.

Equities

• The EUR 30 (DAX) declined from its record high at 9797 down to 9678, after worse than expected monthly PPI data came out from Germany. The index opened higher today, ahead of the German ZEW Economic Sentiment release.

Commodities

• WTI Crude oil (OIL) rebounded from its low at 93.64 US dollars and moved higher yesterday. The crude oil is now trading around 94.35 and remains under pressure as there are concerns that a slower Chinese economy may reduce the demand for oil.

Mover & Shaker with forex options

• The New Zealand Dollar (NZD) skyrocketed from its two week low at 0.8210 all the way up to 0.8339 against the US dollar (USD). The kiwi rose after reports showed an accelerating inflation, indicating that the central bank might increase interest rates in the near term.
• Options traders may consider constructing a Bull call Spread on NZDUSD and benefit from any further upside.
• A Bull Call Spread can be constructed by purchasing an in-the-money Call and sell out an out- of-the-money Call on NZDUSD.