Looking at the session on Monday, there’s almost nothing to pay attention to economic announcement related. However, keep in mind that it will be a shorter than usual day as far as liquidity is concerned, as the US has a bank holiday.
We are paying attention to the EUR/USD pair, as it has fallen during the course of the day on Friday, and the 1.26 level seems to be supportive, and a break down below there we should head towards the 1.25 level. That being the case, the market is a market that we only buy puts in, and as a result we should continue to see bearish pressure all the way down to the 1.20 level given enough time.
The FTSE looks absolutely horrible, and if we can get a daily close below the 6400 level, the FTSE should fall to the 6000 level. If we close below that level, we would be massively bearish of this market and by puts.
Looking forward, we anticipate that the USD/CAD pair should continue to go higher, breaking above the 1.12 level. If we can get above the 1.1250 level on a daily close, the market should then head to the 1.15 handle, and let’s face it – the oil markets aren’t exactly helping the Canadian dollar at this point in time. We are buyers of calls above the aforementioned levels, and on pullbacks offer support. All of that being said, we are big believers in the US Dollar overall, and we are only going long of that currency.
Keep an eye on world markets, it could tell us where the S&P500 goes on Tuesday, as it will more than likely move with the risk appetite.