Although, the trading week started with a much brighter perspective on Monday Asian session. Japanese economy reported All Industries activity index on a positive tone, beating the market consensus (0.5% versus 0.4% expected). That factor was positive for an additional demand for USD/JPY CALL options as well as Japanese equities benchmark NIKKEI 225. European economic calendar was almost empty and binary options for EUR/USD currency pair were trading on a positive tone initially, together with stock indices in the Eurozone. However, German Buba Monthly Report showed a certain slow down in the largest European economy and caused a reversal. Binary options for the most heavy-volume traded pair ended Monday in negative territory. The U.S. dollar CALL options were in demand also versus the Canadian dollar, as Wholesale Sales in Canada showed an unexpected decline of -0.1% (+0.1% was expected) with a significant revision down of the previous month (1.1% versus 1,5%). The absence of buyers for CALL options of the U.S. stock indices pushed all of the main benchmarks lower at the end of the day.
Tuesday started with a more hawkish speech by RBA officials: Debelle, Boulton and Bullock. Those officials left an impression that Reserve Bank of Australia is trying to support falling Aussie and despite the initial bearish reaction, AUD/USD ended Tuesday on a positive tone recovering early losses. German Producer Price Index showed a sudden pick up in the inflationary pressure (0.5% monthly and 3.2% yearly) and that was a supportive factor for the single European currency, especially in the light of upcoming ECB meeting. Nevertheless, EUR/USD binary options finished Tuesday flat. British pound started to fall like a rock versus all of the major currencies on Tuesday with negative economic data in the UK: CBI industrial orders declined in September in the sharpest way this year. The lack of any progress in Brexit negotiations was disappointing for sterling bulls and GBP/USD was trading in PUT mode throughout the whole trading week, except for some recovery on Friday. Bank of England Monetary Committee Governor Carney’s speech did not support the currency as well. The short-term U.S. Treasury bills and notes auction did not find a huge number of buyers for the government debt, however, the demand for stock indices CALL options came in from the side of more optimistic earnings reports by Microsoft, Tesla and Twitter. S&P 500 and NASDAQ 100 indices managed to recover most of the early losses on Tuesday.
Manufacturing PMI and Leading Index report in Japan were positive for the second largest economy in the world. Although, that did not help USD/JPY to keep rising and the binary options for the pair declined due to the risk aversion and falling demand for stocks CALL options. French, German and European Manufacturing and Services Purchase Managers Index was published in red, and that was extremely negative for Euro. EUR/USD started its bearish run one day before the ECB meeting. In contrast, U.S. Manufacturing PMI report was released stronger-than-expected and the demand for USD CALL options soared. Wednesday was the black day for U.S. equities as most of the major stock indices plunged more than 2.5% daily on soft earnings reports led by Google and Amazon. Despite the demand for the greenback, the Canadian dollar surged on rate hike by the Bank of Canada and more hawkish rhetoric by the regulator. BoC Governor Poloz stated during his press conference than Canadian economy does not need stimulus any more and interest rates are coming closer to an average level (1.75% currently). USD/CAD went down to 1.3000 level as traders were buying mostly PUT options for the pair.
Thursday was the big day for EUR/USD as ECB held its meeting and rate decision. Before that happened, the German economy reported weaker-than-expected Ifo economic survey with all of the indices in red compared to market’s consensus. EUR/USD accelerated its bearish slide right after European Central Bank left the interest rates unchanged and Mario Draghi expressed some concerns regarding the terms of tightening cycle to start due to lower inflation and slowing down economy in Eurozone. Although Durable Goods Orders and Initial Jobless claims reports were disappointing for investors in the United States, major stock indices managed to recover some losses from the previous trading session. FOMC Members Clarida and Mester had press conferences as well, and their speeches confirmed traders’ expectations of further rate hikes by the Fed and binary options market was mainly interested in buying CALL options for the greenback versus all of its peers.
Friday trading day was comparatively quiet with most of the currency pairs managed to have a pullback on lower volatility and traders were taking profits. The United States were reporting Gross Domestic Product in the third quarter of 2018, and things appeared to be not so bad as it was widely anticipated. The report came in at 3.5% first reading while market players were expecting a more modest number of 3.3%. It’s worth noting that the GDP price index fell to 1.4%, well below the Fed’s target range of 2%. That was a positive sign for doves who were hoping for the FOMC to ease the tightening of financial conditions in the U.S. The 10-year bond yield went down as investors rushed buying securities. Stock indices bounced from the weekly lows as well.