› Weekly Binary Options market review November 26 - 30.

Weekly Binary Options market review November 26 - 30.

Traditional volatility of an uncertain binary options market was increased last week due to several fundamental factors. First of all, the monetary policy expectations were driven by the release of the Federal Reserve meeting minutes and Chairman Jerome Powell’s speech in the United States. The risk appetite renewed its influence on traders and investors as odds eased for more tightening from the regulator. The FOMC officials stated that the interest rates are reaching the ‘neutral’ level and ‘gradual rate hikes’ are possible in the foreseeable future. In simple words, that means a possible pause in the tightening cycle as early as in spring 2019. The worldwide leading economy showed several signs of cooling with inflationary pressures moderating, and that’s a perfect justification for the Fed to support the corporate sector and meet Donald Trump’s requirements. Investors reacted with a heavy-volume buying of call options for the major stock indices in the United States. Equities charted one of the best weekly performance in seven years with NASDAQ benchmarks leading the gains of more than 6.5% on weekly basis.

The greenback, which used to have an inverse correlation with equities, was trading in a mixed price action versus its major peers. Initially, it’s been sold off due to the lower expectations for the interest rates in the United States and negative macroeconomic data. The best gainers were commodity currencies among majors. Another factor, which forced traders to buy put options for the greenback, was the trade war topic. Donald Trump and Xi Jingpin had a positive rhetoric for a potential trade deal between the two largest economies in the world and trade tensions eased. Those speculations were circulating among investors in the scope of the G20 summit in Argentina and Trump, Xi meeting. The bullish run in stock indices was accelerated on Friday. In contrast, EUR/USD was under the selling pressure again, despite the technical retracement towards 1.1400 resistance. Buyers of PUT options for the pair were dominating on Friday as the European Consumer Price Index failed to meet the market’s expectations, enlarging odds for a longer period of soft monetary policy in the European Union.

Monday started with Australian central bankers’ speeches, which were mostly hawkish for AUD/USD call option buyers. The Leading Index in Japan showed some improvement (104.3 versus 103.9 expected) and Japanese Yen kept softening versus the greenback. German IFO Business Climate index declined in November (102.0 versus 102.3 forecasted). Business Expectations were also in red. Although, Current Assesment conditions improved somewhat and EUR/USD binary options were trading with a mixed momentum. The Bank of England Governor Carney spoke on Monday, underlying the Brexit uncertainty, and traders were buying mostly PUT options for GBP/USD. Comparatively, a low trading volume was seen in the binary options market due to the lack of important macroeconomic data.

New Zealand published its trade balance for October and it was much more pessimistic than analysts predicted. The negative surplus widened for -1.295M compared to -850M forecasted. Moreover, the downward revision of the previous readings both on a monthly and yearly basis forced traders to buy PUT options for NZD/USD. Corporate Services Price Index and BoJ Core CPI supported the Japanese Yen in the Asian session on Tuesday. The European economic calendar was rather empty, while the U.S. trading session brought another disappointment in the data. Consumer Confidence eased in the largest economy worldwide (135.7 versus 135.9 predicted).

Wednesday was much more volatile and in fact, that day influenced the whole trading week, as investors were focusing on major macroeconomic reports in the United States. The Gross Domestic Product slowed down its growth in the third quarter of 2018 (3.5% versus 3.6% expected), which confirmed analysts’ assumptions of cooling factors to weigh on the corporate sector. PCE Prices, Wholesale inventories and Goods trade balance missed the market consensus as well. The Housing sector data was in red with New Home Sales unexpectedly fell in October. All of those factors, together with Powell’s speech, forced traders to buy PUT options for the U.S. dollar and most of the major currencies gained strength on Wednesday. EUR/USD tested the technical resistance level of 1.1400 round figure, and some bulls were predicting that the pair would breach that psychological mark as a hot knife goes through butter. However, that did not happen and EUR/USD closed the trading day slightly below that level. Lower-than-expected crude oil inventories in the United States helped oil bulls to recover some of the losses, however, the upside price action was limited as traders still expect leading producers to step in with an output cut.

Thursday was more mixed with a lower trading volume on hands, as investors were expecting the U.S. Federal Open Market Committee to publish its latest meeting results and statement on the economic outlook. Retail Sales in Japan improved in October and that was another supportive factor for traders to buy call options for USD/JPY. The currency pair is a traditional risk appetite indicator, therefore, the uptick in equities has also supported the yen bears. German unemployment change was positive for the single European currency, and EUR/USD had attempted to break 1.1400 level, hovering around it during the European trading hours. Other EU data was in green as well. However, buyers of CALL options stepped in after the German consumer price index was published with a significant slide in the figures. The U.S. PCE deflator is traditionally watched by the Fed officials very closely, and the softer-than-expected report (2.0% versus 2.1% expected) influenced EUR/USD to close the trading day almost flat. Commodity currencies gained strength versus the greenback on talks geopolitical optimistic talks.

Friday was completely different as the risk appetite came back to the markets. The greenback eased its demand for CALL options almost across all of the board with the only exception of EUR/USD. The problem was in the European Consumer Price Index which slowed down the inflationary pressures in October, and that is a perfect justification for Mario Draghi to keep the soft monetary policy in the European Union. British investors seemed to start losing patience due to the lack of any progress in the Brexit deal with EU. More Put options would be in demand for the sterling pairs next week if things will remain the same as no news is bad news for the Britsh pound. Canadian GDP disappointed the Loonie bulls, declining in September (-0.1% MoM versus +0.1% expected). The Bank of Canada is losing one of the last reason to keep the tightening cycle due to softer data. Another negative factor for the Canadian dollar was oil price which kept falling on Friday, losing almost 1.5% and giving up all of the weekly gains. USD/CAD climbed above 1.3300 again on heavy call option buying and the next week is going to clarify the trend as the Bank of Canada meets for the interest rates decision.

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Source: financialexpress.com


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