› Weekly Binary Options market review July 29 - Aug 03

Weekly Binary Options market review July 29 - Aug 03

The past trading week was rather volatile since the market players were looking for the direction and due to important events happening on the market. The headliner was the Fed, leaving the interest rates unchanged as it has been widely expected. But the hawkish tone was not as aggressive as it has been expected so most of the assets managed to close the trading week almost flat.

Source: Daily Sabah

The first trading day of the week was rather quiet, as most of the traders were expecting some events later. Japanese Retail Sales beat the expectations with the final June release of 1.8%. This news caused an additional demand for the USD/JPY and it lasted three days in a row. European economic reports started the trading week with red numbers as Spanish and German CPI failed to meet the market consensus and showed a weak result of 2.2%. European Industrial Sentiment and Business Climate were in the red as well, while Consumer Survey and Services Sentiment showed some positive outlook. This mixed picture did not have much of the impact, but the EUR/USD was going slightly up until the weekly highs on Tuesday. The Americal trading session was almost empty in the scope of the economic calendar with the only report of Pending Home Sales, which did not have much influence on the price action though.

Tuesday started with weaker-than-expected Japanese Industrial Production and Unemployment rate. Chinese Manufacturing and non-Manufacturing PMI added concerns for the second biggest economy worldwide to slowdown. The pressure on the Chinese Yuan persisted throughout the whole trading week. Bank of Japan had their meeting on Tuesday and the regulator left the interest rate unchanged at ultra-low levels. There are no signs for the BoJ to make any changes in the monetary policy in the foreseeable future as long as the economy is not showing any sustainable growth and the inflation pressure is almost absent. German, French, Italian and EU CPI added optimist for the EUR/USD bulls on assumptions that ECB might change their dovish rhetoric. The U.S. PCE Deflators which is one the main figures for the Fed to monitor inflationary pressures failed to meet expectations in July, growing just 2.2% on yearly basis versus 2.3% expected. The Canadian economy keeps surprising traders. GDP report has been released on Tuesday beating the expectations: 0.5% monthly (0.3% expected) with the revision of the previous reading from 1.0% to 1.2% in May 2018. The yearly figure was strong as well: 2.6% versus 2.3% expected. This news added pressure on USD/CAD despite the stronger-than-expected CB Consumer Confidence in the United States.

Wednesday was the decisive day for the currency market. It started with an optimistic employment change in New Zealand, while the Chinese reports were disappointing again. The British Nationwide HPI did not have much of the impact for the pound, while German Manufacturing PMI was a big negative factor for EUR?USD which started the three-day decline. The support for the greenback persisted on the market due to the expectations of more hawkish Fed. All the mixed Wednesday reports from the U.S. did not cause any change in the price action, as all traders were focused on the upcoming Federal Reserve Statement. The regulator confirmed the tightening cycle to proceed with the rate differentials to grow further, so major currencies kept their decline versus the greenback.

Thursday was a big day for the pound as Bank of England held their meeting and rate decision. Despite the rate hike and the vote-split 9-0, which was a surprise, the cable bulls failed to hold some temporary gains, and the only thing which left on the charts was just a whipsaw. The dramatic reverse came in during the BoE press-conference and it did not confirm any further changes in the monetary policy as the concerns about the Brexit impact still persist. The inflation pressure is not an argument anymore for the BoE hawks, so the market reacted with the selloff for all GBP currency pairs. There were no significant economic reports on the other side of the Atlantic, and the price action was determined mostly by the rumours about more trade war escalation. The U.S. stock indices pared losses, while the demand for the greenback remained stable. USD/JPY pulled back from recent highs though, since the risk-appetite eased somewhat and the Japanese Yen acted as the safe-haven currency.

Australian positive Retail Sales and European Services PMI did not make any changes in those currencies, and the trading resumed with the same main direction. The biggest story for the price action on Friday was the Non-Farm Payrolls report, which has been expected by the currency market traders in order to confirm the current Fed’s economic outlook released on Wednesday. The overall NFP number in July was released a bit weaker-than-expected at 157K jobs added (versus the consensus of 193K). But several additional factors helped the greenback to hold weekly gains: previous period revision of 248K from 213K; the stable low unemployment rate at 3.9%; Average Hourly Earnings of 2.7% and easing pressure from the Trade Balance deficit. The only bigger gainer versus the major weak currencies was the Loonie, which was supported by stronger-than-expected Trade balance in June.

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