Tuesday should be a fairly quiet session, with only a couple of market moving events happening. The Bank of Japan has a press conference, and that of course can always move the Yen and the Nikkei, but as a result we don’t really think that the first half of the day will be very exciting.
However, we do recognize that the theme of a stronger US dollar should continue. We like the idea of buying puts in the silver market on signs of resistance near the $17.15 level, as we approach a downward trend line. Even if we get above there, we would be willing to buy puts all the way up to the $18 level on signs of resistance.
The FTSE had a slightly positive session on Monday, and the UK Industrial Production numbers could help move the market a little bit higher. They are anticipated to come out at 0.1% month over month, and if they are better than that it could put a little bit of upward pressure on both the FTSE and the GBP/USD pair. Beyond that though, there isn’t much to move the markets.
We do like the USD/JPY pair on pullbacks in order to buy calls. We believe ultimately this pair will go above the 110 level, and to much higher levels. It might take a while, but in the meantime we expected the market to bounce around between the 108 level on the bottom, and the 110 level on the top.
We also believe that the DAX looks a little bit on the soft side right now, and short-term rally should offer put buying opportunities. The market simply looks like it failed to hang onto anything along the lines of a gain on Monday, and that very well could bleed into the Tuesday session as well, at least until we get down to the €9000 level where we would anticipate to see quite a bit of support.