Monday Asian quiet trading session did not promise anything like that. Economic data kicked off with Bank of Japan publishing monetary policy meeting minutes and BoJ Governor speaking about the interest rates and economic outlook. Both events confirmed the absence of any changes for the third largest economy in the world, and USD/JPY was trading in a slightly bullish bias with CALL options dominating for the currency pair. The Chinese Caixin Services PMI slowed down in October reporting the index at 50.8 level versus 52.9 expected and 53.1 previously. Spanish Unemployment Change did not have a major impact on the Euro. The British Services Purchase Manager Index came in worsening in October (52.2 versus 53.3 expected and 53.9 previously). However, binary options market traders were pushing the CALL button actively for all of the sterling pairs due to the positive headlines in the Brexit topic. Theresa May’s government officials announced a progress in Brexit negotiations with EU and the pound was bolstered by those rumours. BoC Governor Poloz had his monetary policy speech in early New York trading session but he failed to support the falling Loonie. The U.S. economy reported services and non-manufacturing Purchase Managers indices with both figures in green. The greenback traded on a mixed sentiment though.
Asian trading session started with Japanese data on Tuesday. Household spending surprisingly declined in September both month-on-month and year-on-year. The final reading of -4.5% and -1.6% respectively failed to meet the market expectations of the growth and that news together with the Retail Sales Monitor in red zone forced traders to buy PUT options for Japanese Yen. Aussie traders were watching Reserve Bank of Australia in rate decision meeting. The regulator came out with the ‘unchaged’ verdict, stating a certain improvement in the economic outlook. Buyers of CALL options for Aussie pairs won the fight in a volatile trading session and AUD/USD soared towards 0.7300 psychological barriers, the first time in 10 weeks. European economic data was mixed with the more optimistic shift. Purchase Managers indices were published for France, Spain, Italy, Germany and Eurozone with most numbers in green. Moreover, Producer Price Index picked up the momentum in September, increasing inflationary pressure after strong CPI report last week. So, the monthly change was published at 0,5% level (0.4% forecasted) with the positive revision of the previous period (0.4%). The yearly spike in inflation was even more significant with a 4.5% change versus 4.2% expected by the economists. All those strong reports lifted the single European currency towards 1.1500 versus the greenback technical resistance as speculators were buying CALL options for EUR/USD. Building Permits rose in Canada for 0.4% in September. JOLT jobs openings failed to meet the consensus, however, the main topic was the midterms in the United States. Stock indices soared more than 2% on the optimistic political outlook for corporate profits and the tax cut.
New Zealand Central Bank was focusing on the last economic reports in the country before the rate decision. Employment Change was published stronger-than-expected (1.1% versus 0.5% expected), Labour Cost was flat, Participation Rate rose to 71.3% and Unemployment Rate fell sharply to 3.9% from 4.4% in the second quarter. Those improvements were supportive for Kiwi bulls and they were massively buying CALL options for NZD/USD on Wednesday Asian trading session. Japanese data was mixed, however, USD/JPY kept climbing Northwards on risk appetite spike. The volatility went down in the European trading session as traders were awaiting the main event of the entire week for the financial markets - the Federal Reserve meeting. The only data to watch was the Halifax House Price index in the UK and the Retail sales report for the European Union. Stagnation has been noticed which is completely negative for Euro bulls. Ivey PMI rose in October in Canada and the Loonie had a bullish whipsaw initially. However, the demand for USD CALL options overwhelmed closer to the end of the North American trading session.
Reserve Bank of New Zealand followed its neighbour and left the interest rates unchanged with a more hawkish economic outlook. Although, Kiwi bulls struggled to perform the same recovery as for Aussie CALL options due to the strong demand for the U.S. dollar across the board. The interest rates differentials and risk aversion weighed also on other currencies as Japanese Financial data slowed down its growth in October. In contrast, China reported a significant improvement in trade balance with both exports and imports numbers rising sharply in October compared to the same period a year ago. That was the reason why export-oriented commodity currencies were not falling so sharply as Euro and pound, for instance. German Trade Balance report was ugly though, and traders rushed to buy PUT options for EUR/USD with the pair accelerated its losses. Although the Federal Reserve left the Interest rates unchanged, FOMC statement supported the greenback which gained strength versus its major peers throughout the rest of the trading week.
Friday was comparatively quiet despite several important reports were released. Chinese inflation remained at the same level and British GDP performed stagnation as well. Some of the components of that report were slightly positive but that did not help the sterling from further decline versus the greenback as traders were buying PUT options for GBP/USD massively. The key event for stock indices was the U.S. Producer Price Index report which showed an unexpected acceleration in October: PPI +0.6% MoM (0.2% expected); PPI +2.9% YoY (2.5%); Core PPI 0.5% MoM (0.2%); Core PPI +2.6% YoY (2.3%). All those numbers were in favour of the worse scenario for equities as the Federal Reserve could tighten the financial conditions more rapidly which would heart corporate profits at the end of the day. The economic growth might slow down in such conditions, some analysts talk about a potential recession in the United States in 2019. Stock indices sold off on Friday.