Currencies
- The euro collapsed by more than 240 pips yesterday against the US dollar (USD) and reached its lowest level at 1.2918, since July 2013. The single currency slid after the ECB cut the interest rate to a record low at 0.05%. Mario Draghi signalled the need of at least 700 billion euros in order to help the European economy.
- The US dollar (USD) climbed up to 105.70 against the Japanese yen and recoded its highest level since October 2008. The yen weakened as the Bank of Japan kept its stimulus plan unchanged, while the US economy is recovering and may increase interest rates sooner than expected.
Equities
- European indices are on their highs, with the DAX is trading near its two month high at 9735, the FTSE 100 reached its record high at 6906 ahead of the referendum in two weeks’ time and the EU Stocks (ESX) climbed up to 3286.
Commodities
- Crude Oil declined from its high at 95.86 down to 94.14 US dollars per barrel. The energy lost part of its previous gains as the US refineries reduced their operation prices.
Mover & Shaker with forex options
- Gold continues the downside and hit a new low at 1257 US dollars an ounce. The precious metal advanced up to 1277 after ECB announced a cut on interest rates and start buying assets. Gold declined later on the day as the greenback remains strong across the board. On the calendar, the US Non-Farm Payrolls due at 12:30 with expectations at 226K new jobs.
- Option traders may consider constructing a Bear Put Spread on the XAU/USD and gain if the pair continues the downside, while the risk is limited to the premium paid.
- A Bear Put Spread can be constructed by buying an in the money Put while selling an out of the money PUT.
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