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With the Bank of England announcing interest-rate decisions today, as well as the Crude Oil Inventory numbers, and of course the Unemployment Claims number coming out of the United States, there is plenty to move the markets today. With that being the case, we are looking at a potentially strong trading market.
1 – The US dollar should continue to strengthen in general, but we recognize that volatility will be the order of the day. We like buying calls or puts in favor the US dollar depending on the currency pair, but we believe ultimately the commodity currencies will be the ones they get punished more than anything else. This means buying calls in the USD/CAD pair, and believe of course puts in the NZD/USD and AUD/USD pairs.
2 – Stock market should continue to go higher in general, and pullbacks should offer call buying opportunities going forward as in general US stock markets continue to be favored over many others. On top of that, European markets look like they are trying to break out, but volatility will continue be an issue as well. With this, we are looking to buy calls on short-term pullbacks, offering short-term trades to the upside.
3 – Gold markets fell significantly and look ready to test the support level at the 1100 level. With that being the case, if we can find some type support in this area, we would consider buying calls, but quite frankly it looks like precious metals are about to get hammered again and as a result we are much more comfortable buying puts.
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