By: Andrew Keene
The Australian Dollar declined to $1.0233 on May 3 after the news of weaker domestic demand in the consumer retail sector. The Australian Bureau of Statistics reported a decrease in sales of -0.4% for March, falling below analyst expectations for the month at +0.1%.
Retail sales for February rose to +1.3% bringing optimism in the market after a slow forth quarter in 2012. Feebler domestic data for March coupled with the drop in China’s PMI to the lowest levels since August 2011, signaled slowing performance for the country’s largest export market.
The news added to the concerns of a further weakening economy, which could force the Reserve Bank of Australia to cut interest rates to a new low. Current market sentiment assumes a 53% chance in the reduction of rates, which stand at 3% since the last cut in December. Corresponding with the lower prices of oil and iron ore, AUD currently trades at 1.02412 near midday on May 6.
My Trade: Selling the FXA June 102-103 Bear Call Spread for $.50
Risk: $50 per 1 lot
Reward: $50 per 1 lot
Breakeven: $102.50
Greeks of the Trade:
Delta: Short
Gamma: Short
Theta: Long
Vega: Short