Asian trading session was comparatively quiet on Tuesday and the volatility renewed on European session with the British economy bringing more positive surprise for sterling bulls: Average hourly earnings have beaten the market expectations publishing the final number of +2.6% (2.4% consensus) and claimant count change of 8.7K jobs in August. CALL options were dominating for all of the British pound pairs in the scope of upcoming meeting and rate decision of Bank of England later this week. Bulls took the market under control and GBP/USD continued its recovery. ZEW institute was reporting current business conditions and market expectations in its survey for the European economy and economists managed to make a positive surprise for EUR/USD traders. Binary options for the pair were in a CALL mode that day on ZEW Economic Sentiment in Eurozone as the business activity might create an additional pressure on ECB to start hiking sooner rather than later. Housing starts in Canada were published in red but NAFTA negotiations’ optimistic developments have overshadowed that secondary economic report. USD/CAD was moving in PUT-mode throughout almost the whole trading week. The U.S. JOLTs jobs opening was confirming the robust employment but that was not a huge surprise for traders.
Industrial Production in Europe has eased the bullish momentum for Euro pairs as the report showed some slow down in August. But the price action on Wednesday was not in favour of the greenback as traders were disappointed by inflation report in the United States. One of the most important figures for the Federal Reserve as the justification of their gradual rate hikes is always CPI and PPI monthly and quarterly report. So, Monthly PPI showed a negative monthly performance in August (-0.1% versus +0.2% expected). The yearly number was not good for the greenback bulls as well: 2.8% versus 3.2% predicted. Core PPI which excludes energy prices was also negative for the fourth rate hike perspective: 2.3% yearly (versus 2.7% as the consensus). That news renewed talks about the Fed to hold after the rate hike in September which is already priced in by the market players. Next FOMC steps are becoming more data-dependent and that promised an increased volatility for most of the reports published in the United States. The Crude Oil Inventories declined with much sharp pace in the U.S. last week: -5.296 million barrels versus -1.3Mbbl forecasted. That dramatic slide in the inventories helped WTI crude oil bulls to push the prices up to $70 resistance and most of the speculators were buying CALL options for the commodity.
Thursday was also a positive surprise for Aussie bulls who desperately needed any support from fundamentals in order to stop AUD/USD from falling like a rock. So, Unemployment in Australia managed to beat the market consensus with 44K jobs added in August (16.5K was expected). But the downward revision of the previous reading (-4.3K) left some questions regarding the RBA to react by hawkish measures. German and French CPI was exactly in line with the expectations and no volatility was noticed during the release of that reports on Thursday morning. Binary options traders were expecting for two major central banks’ rate decision and comments: ECB and BoE. Bank of England Monetary Policy Committee left the interest rates unchanged with the vote split 9-0. That was widely expected and the initial reaction was South for GBP/USD. But the overall sentiment was bullish for the pound as buyers of CALL options stepped in and sterling managed to close the day with the highest growth in the trading week. ECB followed the neighbour and left the interest rates unchanged with the same amount of assets purchasing program. Investors were listening for Draghi’s press conference and the general reaction was positive for EUR/USD as the ECB President confirmed the regulator’s readiness to start tightening cycle sooner rather than later. The United States were reporting CPI figures almost at the same time and Consumer Inflation came out in line with the producer's figures released the day before. The greenback continued to slide across the board.
Friday was completely the opposite though. Most of the currency pairs lost a significant part of the gains. Some traders were taking the profits, some traders paid attention to the trade war woes renewed that day. But the general tendency for the economic events was the same as the Chinese economy reported Industrial Production growth, Wages in Eurozone was slightly positive and the U.S. Retail Sales reported a significant slow down in August. The last fact has caused taking profits on the equities side and the U.S. stock indices gave up some of the early week gains.