After last night’s spectacular moves by the EUR and GBP averaging more than 190bps, the current spot is at the 50% retracement level. The market can now make very violent swings given the current volatility.
While I am of the opinion that the non farm payroll numbers will probably disappoint given the earlier poor showing of the ADP numbers, we are going into Spring and the start of new job placements. On the off chance, that the non farm payroll numbers coming in stronger than forecast, we should see USD powering back against the EUR and GBP.
Volatility in equities and forex are high right now, and hedging through the options or CFD market is very expensive.
If one is being prudent to potentially capture either the upswing or downswing, buy a call/put spread option would be a safe bet, as one would WIN either way. However, the cost of the spread option till Monday 10 June is a hefty 114bps. So is it worth it? NO.
Which means, one will have to take a gamble on one side. My advice is to place a stop loss as it is our only protection.
I am deciding to stay out of the market today and instead, spend time with my wife going to the spa and a nice dinner.
Here’s wishing all of you a great weekend. Remember, in the forex market there is always another day of opportunity, so if you don’t feel comfortable…….don’t push yourself.
The Panthenon Investment Group 