The EU Morning Report - Kiwi is under pressure - 24 July 2014


Currencies

  • The euro (EUR) remains range bound near its 8-month low against the US dollar (USD) at around 1.3458. The pair remains under pressure, ahead of the US Unemployment claims due at 12:30 GMT and better than expected figures might move the pair lower.
  • The US dollar (USD) gained yesterday against the Japanese yen (JPY) with its high at 101.51. The pair might be volatile ahead of today’s announcements, with the US New home sales expected to be at 485K and tonight the yearly Tokyo Core CPI will be announced with expectations at 2.7%.

Equities

  • China 50 (CNX) reached 3-month high at 7009 as China’s Manufacturing increased to its strongest reading for the last 18 months.

Commodities

  • Natural Gas (NGS) continues its drop and reached its 10-month low at 3.740 USD per mmBTU. On the calendar, the Natural Gas Storage will be announced at 14:30 GMT while expectations are at 95B cubic feet held in the underground storage.

Mover & Shaker with FX Options

  • New Zealand dollar (NZD) lost more than 130 pips yesterday and declined down to 0.8569 as the New Zealand’s central bank warned of the potential for a significant fall of the currency. Kiwi continues its bearish trend and is currently trading around 0.8580.

  • Option traders may consider constructing a Back Spread Strategy with Puts on the NZDUSD 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