The EU Morning Report - Central Bankers Meet at Jackson Hole as Dollar Weakens - 22 August 2014


Currencies

  • The euro (EUR) gains after three consecutive bearish days against the US dollar (USD). The single currency rose to 1.3287 despite the worse than expected European Flash Manufacturing PMI at 50.8, while the expected was at 51.4. Today the President of European Central Bank (ECB) Mario Draghi will speak at the Jackson Hole Symposium, along with Fed’s Chair Yellen.
  • The US dollar (USD) rose for fifth consecutive day against the Japanese yen (JPY) to 103.95. The greenback strengthened after better US Industry data and Existing Home Sales data, before Yellen’s speech at the Jackson Hole Symposium, along with the President of ECB Mario Draghi.

Equities

  • European equities gained yesterday. The Germany 30 (DAX) advanced to 9386, the France 40 (CAC) climbed to 4287 and the EU Stocks 50 (ESX) went to 3120.

Commodities

  • Corn (CRN) rose to 363.63 USD cents per bushel as the yield forecast may be as the US government estimated.

Mover & Shaker with forex options

  • Gold (XAU) has its biggest drop this month as it fell by 1.4%, from 1290 to 1272 as investors expect a stronger dollar before Yellen’s speech at the Jackson Hole Symposium.
  • Option traders may consider constructing a Straddle on the XAUUSD and gain if the pair moves in either direction, while the risk is limited to the premium paid.
  • A Straddle can be constructed by buying an at the money Put and Call.

Written by Demetris Constantinou
Currency Strategist at easy-forex®