USDRUB resumed its uptrend back again on the eve of fed's decision and has been continuing non-stop streak of rallies up to 65.8622 (today's highs), we project the USD to consolidate in the week ahead.
Everything is going in favor of rate hike expectations,
- The unemployment report beats the forecasts and flashes at 264K.
- Building permits are increased to 1.17M from previous 1.13M.
- Retail sales figure is in line with forecasts but increased to 0.2% from previous 0.0%.
- Trade balance is reduced to -110B from previous flashes at -118B.
We don't see downside risks to the USD in the short term and keep our bullish medium-term view.
Trade tips: Bull Call Spreads (BCS)
Buy 15D (1%) in the money 0.50 delta call option while shorting 7D (1%) out of the money call option for net debit.
Why call spread: An investor with a bullish mindset often deploys this strategy and wants to capitalize on a modest advance in price of the USDRUB. If the investor's opinion is very bullish on this pair, it will generally prove more profitable to make a simple call purchase.
Risk Reward profile: An investor will also turn to this spread when there is discomfort with either the cost of purchasing and holding the long call alone, or with the conviction of his bullish market opinion.
The reward is that it tends to be profitable when the USDRUB increases in price. It can be established in one transaction, but always at a debit (net cash outflow). The ITM call will always be purchased at a price greater than the offsetting premium received from writing the call with the higher strike price.
