The EU Morning Report - Dollar weakens across the board as Fed kept a dovish tone - 10 July 2014


Currencies

  • The euro (EUR) climbed from 1.3601 up to 1.3646 yesterday against the US dollar (USD). The single currency reached a weekly high as FOMC Meeting minutes kept a dovish tone in a statement that was lacking of any large surprises.
  • The US dollar (USD) advanced up to 101.85 before retracing back to 101.51 against the Japanese yen (JPY) after the FOMC Meeting minutes, as Fed didn’t show signs of increasing the interest rates earlier than expected. The US unemployment data will be announced at 12:30 GMT, with expectations at 316K unemployed individuals.

Equities

  • European equities remain under pressure as, the Germany 30 (DAX) closed at 9823, the EU Stocks 50 (ESX) closed at 3206 and the France 40 (CAC) at 4364.

Commodities

  • Corn (CRN) reached four 4-year low at 3.88 USD per bushel as the US which is the biggest exporter will boost global stockpiles.

Mover & Shaker with FX Options

  • British Pound (GBP) rose up to 1.7166 against US dollar (USD) and is approaching near its 6-year high. The UK Official Bank Rate will be announced today, as UK is heading towards better economy.

  • Option traders may consider constructing a Long Straddle on the GBPUSD and gain if the pair moves in either direction, while the risk is limited to the premium paid.
  • A Long Straddle can be constructed by buying an at the money Put and an at the money Call.
Written by Demetris Constantinou
Currency strategist at easy-forex