The EU Morning Report - Gold continues the bearish trend and trades below 1300 - 25 July 2014


Currencies

  • The euro (EUR) continued the downtrend and reached a new 8-month low at 1.3437 against the US dollar (USD). The single currency rebounded up to1.3484 after better than expected German Flash Manufacturing and Flash Services data. The single currency is now trading around 1.3467 while the German Ifo Business Climate is on the calendar for today.
  • The US dollar (USD) rose yesterday against the Japanese yen (JPY) towards 101.76. The greenback gained after the low US Unemployment claims set to be the lowest in the last eight years, which is another sign that the US labour market is recovering.

Equities

  • The European equities gained yesterday as the European manufacturing and services indicators showed higher than expect. The German 30 (DAX) advanced to 9783, the France 40 (CAC) went to 4400 and the Swiss (SWI) to 8631.

Commodities

  • Soybeans dropped from its one week high at 1231 back to 1200 USD cents per bushel, as the global supply seems to be increasing.

Mover & Shaker with FX Options

  • Gold (XAU) continues its bearish trend as yesterday fell another 15 USD, while reached one month low at 1287. The demand for the precious metal has been decreased as the outlook for economic growth improved.

  • Option traders may consider constructing a Back Spread Strategy with Puts on the XAUUSD and gain if the pair moves lower, while the risk is limited to the premium paid.

  • A Back Spread Strategy with Puts can be constructed by selling an at the money Put while buying an out of the money Put at double amount.

Written by Demetris Constantinou
Currency Strategist at easy-forex