The EU Morning Report - Euro is Under Pressure as Inflation Data Comes Ahead Tomorrow - 27 August 2014


Currencies

  • The euro (EUR) continues its bearish trend against the US dollar (USD) and it touched its lowest point since September 2013 at 1.3152, as European inflation data will come out tomorrow. The single currency is falling as investors believe that the inflation data will be worse than expected as the latest economic data were disappointing for the Eurozone and the European Central Bank (ECB) may add more stimulus measurements.
  • The US dollar (USD) it climbed from 103.74 up to 104.16 against the Japanese yen (JPY) and is now trading around 104.00. The Japanese yen is under pressure as the US quarterly GDP will come out tomorrow.

Equities

  • US equities gained yesterday as the US economy recovers faster, with the US 500 (SPI) passed for first time the level of 2000, while the US 30 (DOW) recorded new high at 17129 and US Tech (NDQ) near its all-time high at 4075.

Commodities

  • Sugar (SGR) rose yesterday from 15.29 up to 15.72 USD cents per pound, after the continuous bearish trend over the last two month. Demand for Sugar needs to exceed supply by 3 million tons before prices will raise significantly.

Mover & Shaker with forex options

  • Gold (XAU) rose up to 1290 before it retraced back to 1280 yesterday against the US dollar (USD), as the talks between Russia and Ukraine were positive and the tensions in Middle East eased.
  • 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®