Currencies

• The euro (EUR) has been on a bearish trajectory since the FOMC statement on Wednesday. The announcement of a USD 10 billion taper has pushed the value of the dollar higher leading the pair lower to 1.3635 from 1.3757 earlier this week. At the same time S&P have stripped the EU of its AAA rating.

• The US dollar (USD) remains bullish against the Japanese yen (JPY) after reaching a five year high at 104.57. The dollar has strengthened significantly and will continue to do so against the yen as the Fed will be curtailing the future dollar supply.

Equities

• European stocks opened higher with the GER 30 (DAX) opening at 9376. The index has risen from a recent low of 8985 even as the EU has been downgraded by Standard & Poor’s to AA+ from AAA amid considerations of lesser cohesion in the union.

Commodities

• Brent Crude (BRT) remain range bound over the medium term around 109.99 as global supply considerations have yet to be clarified, including the Iran negotiations.

Mover & Shaker with FX Options

• The Australian dollar (AUD) continues to weaken against the US dollar (USD) over the medium term. The pair has fallen from a high of 0.9754 to 0.8823 since October as the greenback strengthens and the Australian economy follows a natural depreciation as demand for exports of its raw materials is under stress.

• Options Traders expecting a weaker Aussie may be constructing Bear Put spreads on the pair.

• The Bear Put spread is constructed by buying an at-the-money Put and selling an out-of-the-money Put option on the AUDUSD.