EURO: March unemployment report is moderately better report. It also provided some strong indications by revising up previous numbers. This means US economy recovery is breather and growth story is still intact. This fundamental news is strongly supportive of dollar and bearish to EURO. On the manufacturing front, ISM for manufacturing reported 59.6 a very strong number indicating expansion in manufacturing sector. This news might allow fed revising its stance on the ultra loose monetary policy. On Europe front, still Greece problems are not yet over. Greece is trying to roll its debt by issuing new bonds. This means there is still uncertainty in the direction of euro. Fundamental factors, growth is favoring strong dollar but sovereign debt issues are weighing in. Still we have Portugal, Italy, Ireland and spain to come up with stronger fiscal measures. In the light of these factors Euro looks vulnerable. So medium term the dollar is going to look strong.
Some recommended strategies are
1) Short Euro
2) Buy June futures put options
Buy 1.34 E6M0 june puts at 2450 and sell 1.30 E6M0 June put at 1150 for net debit of 1200.
This is a very nice way to monetize events strong recovery in US economy and sovereign crisis related issues in Europe.
Risk to this option is US economy hits a wrong note due to concerns of the Domestic fiscal crisis in various states and housing related drag has surprising negative impacts.
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