The past week started with a mixed data from Japan. Capacity Utilization showed an unexpected recovery of 2.2% in August while Industrial Production failed to meet the market’s expectation of 0.7% monthly growth (0.2% actual rate). Binary options for USD/JPY continued to trade on PUT mode, however, a sudden reversal in Japanese stocks index Nikkei 225 caused a flow of buyers for dollar-yen CALL options due to the growing risk appetite. The lowest rate of 111.60 was the weekly bottom and the pair traded more on the bullish bias throughout the week. Swiss Franc was gaining strength despite weaker-than-expected Producer Price Index in September. So, inflation in Switzerland unexpectedly declined in August (-0.2% month-over-month and 2.6% year-on-year). Nevertheless, USD/CHF PUT options were in demand due to the greenback’s overall weakness on Monday. The European economic calendar was empty, so EUR/USD options were trading on the same bias as most of the major currencies reflecting the equities’ momentum. Further demand for EUR/USD CALL options was caused by the weak Retail Sales report in the U.S. (-0.1% versus 0.4% expected) in September.
Commodity currencies such as Aussie and Kiwi had a bullish bounce which was supported by more hawkish RBA Meeting Minutes and stronger-than-expected Consumer Price Index in New Zealand (0.9% monthly and 1.9% yearly). That news confirmed several analysts’ suggestions that things are not so bad as it has been previously anticipated, and AUD/USD and NZD/USD were extremely oversold recently. So, CALL options for both pairs were in demand on Tuesday Asian trading session. Chinese inflation report came in matching the market’s consensus, and the lack of decline in CPI reading also supported overall sentiment to buy high-risk assets. European trading session started with a disappointing German Import price index. Next data from EU was all in red as well: Italian CPI kept declining, German and European ZEW institute Current conditions and the economic sentiment was lower-than-expected for October and Europen Union trade balance failed to meet the market’s expectation. EUR/USD failed to hold early gains above 1.1620 and PUT options for the pair were dominant for three days in a row. Traders were rushing to buy CALL options for GBP/USD as the British economy reported surprisingly strong growth of average earnings index in August. However, that bullish spike was limited in time and value as the UK - EU negotiators did not provide a clear resolution of the current Brexit conditions. The deal seems to be stuck and that uncertainty weighs on sterling. EU’s main negotiator Barnier proposed a longer Brexit transition period for the U.K. but that did not add any optimism for currency traders. Binary options for sterling pairs sold-off. On the other side of the Atlantic, the U.S. economy reported robust growth in JOLT jobs openings which caused an impressive rally for equities (S&P soared 2.4%).
Wednesday was important for all of the financial markets as traders were expecting for the Fed minutes to be published closer to the end of the day. Some improvement in the Chinese financial sector gave a support for high-risk assets, though the trading volume was low. British inflation data was in focus and Consumer price index disappointed investors (2.4% yearly versus 2.6% expected) while producer price index showed a modest improvement compared to the previous quarters (PPI input 10.3% versus 9.4% expected). The lack of inflationary pressure does not give any justifications for the Bank of England to hike the interest rates one more time this year, so there is no support from the fundamental side for GBP/USD and other sterling pairs which kept declining on Wednesday. European CPI cam in exactly in line with the market consensus, so there is nothing to expect from Draghi and company but to keep telling the same story and to keep postponing the end of the quantitative easing programme in Europe. Building permits in the U.S. were slightly lower-than-expected in September, though that did not have much of the influence for the binary options markets. Crude Oil inventories came in much higher-than-expected and that news forced traders to buy PUT options for the black gold, the price of which kept falling. The key event was the Fed minutes on Wednesday. FOMC members did not say anything new, however, they reminded about further interest rates hikes on the table. The options for U.S. equities were trading with a mixed mood.
Asian traders kept buying CALL options for USD/JPY on Thursday due to an improved trade balance report which showed a much wider surplus than it was predicted (+140B versus -50B expected and -430B as the previous reading). The unemployment rate in Australia was also not that bad as some Aussie bears would have hoped for (5.0% versus 5.3% expected). AUD/USD and NZD/USD were consolidating losses in a tight sideways range. Retail Sales in the U.K. were much more ugly than sterling bulls could imagine, and that added fuel to the fire of declining options for GBP/USD. Philadelphia Fed manufacturing index showed a positive momentum in September, and the U.S. dollar kept strengthening in NY session.
Friday’s economic calendar was almost empty with two exceptions: China and Canada were reporting a pack of economic data. The second largest economy in the world showed an improvement in fixed assets investments (5.4%) and in retail sales (9.2%). Although, the GDP report (6.5%) and Industrial Production (5.8%) could not add any support to falling stock indices worldwide. Canadian reports were completely bad for the Loonie bulls. Core CPI (1.5% vs 1.7%), CPI (2.2% vs 2.7%) and Retail Sales (-0.1% vs 0.3%) - all those reports do not give any background for Bank of Canada to hike the interest rates during the meeting next week. USD/CAD options broke the recent range and closed the trading week above 1.3100.