The EU Morning Report - US Stocks Fall Ahead of Today’s NFP Release - 1 August 2014


Currencies

  • The euro (EUR) remained range bound near its monthly lowest point at 1.3385 as the European CPI came out to be worse than expected at 0.4%, while the European Unemployment rate was better than expected at 11.5%.
  • The US dollar (USD) remained range bound against the Japanese yen (JPY) at 102.76 as US Unemployment Claims this week were as expected at 302K. Dollar continues to be the stronger currency between majors as today the Non-Farm Employment Change will be announced which might give it a further boost.

Equities

  • US equities dropped most since February yesterday. The US 500 (SPI) fell to 1927, the US 30 (DOW) went to 16525 and the US Tech (NDQ) to 3894.

Commodities

  • WTI Crude (OIL) continues to drop while it reached a 4-month low towards 98 USD per barrel as US stockpiles rose and demand declined in the US.

Mover & Shaker with forex options

  • The Canadian dollar (CAD) continues its bearish trend against the US dollar (USD), while reaching a 7-week low at 1.092 despite the better monthly GDP at 0.4%. The loonie is still under pressure as oil prices continues to fall hitting a major Canadian export.
  • Option traders may consider constructing a Back Spread Strategy with Calls on the USDCAD and gain if the pair moves higher, while the risk is limited to the premium paid.
  • A Back Spread Strategy with Calls can be constructed by selling an at the money Calls while buying an out of the money Calls at double amount.

Written by Demetris Constantinou
Currency Strategist at easy-forex®