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Originaly presented by Richard Cox.

In the week ahead, we will see reduced volatility in the early parts of the week, as traders remain on the sidelines ahead on the monthly Non Farm Payrolls and Unemployment Rate surveys. The Fed’s target Unemployment Rate is 6.5%, so this week’s data will be critical in assessing market sentiment with respect to the next moves from the US central bank. NFPs are expected to show a slight dip to 165,000 (after the 175,000 seen in May). The Unemployment Rate is expected to hold steady at 7.6%, which is still well above the Fed’s target. If we do see a weaker number, declines in stocks are likely to be short term in nature, as it will lead to increased speculation that the Fed will opt to maintain its QE programs and postpone reductions past September.

1. Last week’s EUR/CHF trade closed in the money and while there is still significant upside in this pair, I will need to see some evidence that the EUR/USD is stabilizing before entering into new positions in the EUR/CHF. With a significant amount of Dollar-sensitive data on this week’s calendar, I will also be holding off on USD positions until the Non Farm Payrolls are released. Instead, I will be holding a bullish position in the AUD/JPY, which has found support at a key 50% Fib retracement and should see strong upside if the USD/JPY breaks above 100. Buy weekly CALL options in the AUD/JPY at 91.50, but consider closing these positions early if they are in the money going into the NFP release.

2. For stock trades, I will look to play the weakness in Oracle Corp. (ORCL), which has shown consistent earnings weakness and is now breaking important technical levels. Oracle’s last results showed fourth quarter profits of $3.81 billion ($0.80 per share), which was a worse than expected improvement from last year’s numbers. The stock has posted a modest bounce after breaking the 50% Fib retracement of the rally from $25, so I will use this strength as a selling opportunity. Buy one-month PUT options in ORCL at $30.80.