The EU Morning Report - Dollar Strength Ahead of Tomorrow’s FOMC Statement - 29 July 2014


Currencies

  • The euro (EUR) remains range bounded near its lowest point in the last 8-months against the US dollar (USD) at 1.3437. The single currency remains under pressure despite the bad data from the monthly US Pending home sales.
  • The US dollar (USD) rose against the Japanese yen (JPY) towards 101.97 earlier in the morning as the Japanese Unemployment rate was higher than expected at 3.7% and the yearly Japanese retail sales decreased more than expected at 0.6%.

Equities

  • US equities crashed yesterday as monthly US Pending home sales were worse than expected before they rebound back. The US 500 (SPI) went to 1972, the US 30 (DOW) to 169916 and the US Tech (NDQ) to 3958.

Commodities

  • WTI Crude (OIL) continues its bearish trend around 101.40 before supply data which may increase fuel demand.

Mover & Shaker with forex options

  • The New Zealand’s Dollar (NZD) fell earlier in the morning against the Japanese yen (JPY) despite worse than expected Japanese Unemployment claims. The pair is currently trading at 86.783.
  • Option traders may consider constructing a Back Spread Strategy with Puts on the NZDJPY 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 Puts while buying an out of the money Puts at double amount.

Written by Demetris Constantinou
Currency Strategist at easy-forex®