› Weekly Binary Options market review December 10 - 14.

Weekly Binary Options market review December 10 - 14.

The most popular financial instruments changed the trading direction several times in the binary options market last week. The U.S. stock indices were trading in a put-options mode at market opening on Monday, whipsawing on the downside and reversing the price action with a huge demand for call options. An inverse correlation was seen in 10-year Treasury yields with an additional demand for U.S. government bonds, while dollar options were trading in the put-mode across the currency market. So, Euro, Japanese Yen and Swiss Franc gained strength initially as traders were buying call options for those currencies versus the greenback. The same tendency was dominant for commodity currencies and emerging markets assets. The key factor driving that 3-days rally was the lack of additional inflationary pressure in the U.S. which made traders suggesting that the Federal Reserve would not have a justification for acceleration of the tightening cycle, making a pause in the interest rates hikes. Another reason was coming from a more optimistic perspective in the U.S.-China trade deal with fewer risks of additional import tariffs to be imposed in the nearest future. However, that all changed on Thursday, as the International Monetary Fund published its survey, cutting the global economic forecast for 2019. Macroeconomic data from several important regions was ugly led by Chinese reports missing the market expectations. European Central Bank was much more dovish than it was widely anticipated as ECB President Mario Draghi expressed concern about the lack of inflationary pressures and possible economic slowdown in Eurozone. The British pound was leading the losses of major currencies versus the greenback on strong demand for put options due to bad news coming from Brexit story and political turmoil in the UK with Prime Minister Theresa May facing non-confidence motion in the Parliament. Friday finished the trading week with heavy-volume risk aversion trade as the demand for put options was huge in equities, bonds and currencies. Commodities were also hit by the trade war worries with industrial and precious metal plunging to weekly lows. Oil prices kept falling as traders were purchasing put-options due to the uncertainty in OPEC’s policy to cut output and growing crude oil inventories in the United States.

Monday, December 10.

The trading week kicked off with important Japanese data as official agencies were reporting the gross domestic product and financial sector conditions during the early Asian trading session. So, GDP report missed the expectations with the headline figures coming in at an ugly reading of -2.5% y/y versus -1.9% expected and -0.6% q/q compared to -0.5% forecasted. Adjusted Current Account showed the decline as well with 1.21T yen compared to 1.29T previously anticipated. Such a worse-than-expected data forced traders to buy the safe-haven put options for USD/JPY and the pair slipped down to 112.20 technical support in a couple of hours. One more factor for that price action was related to the situation in global equities which were trading in the put-mode after the weekend did not bring any good news on trade war tensions. The single European currency had found some support from call-options buyers as German Trade Balance improved its positive surplus in October, posting 17.3B versus 17.2B expected. Both German Imports and Exports figures were also in green, signalling that the situation isn’t so bad in the leading European economy. In contrast, British GDP report brought a huge disappointment
EUR/USD kept falling as both German and European Purchase Managers Indices declined, confirming Draghi’s dovishness. The U.S. equities accelerated the brutal sell-off with major benchmarks losing more than 2% in the single-day price action. Stronger-than-expected retail sales report in the United States did not help traders to start buying call options for equities. The greenback was trading in the call mode though, enlarging its role as the safe-haven currency. It’s also been driven by the demand for call options in the fixed-income market as U.S. Treasury yields were climbing again an risk-aversion trade.

for the Sterling bulls with all of the key components missing the expectations. Headline number came in at 1.5% yearly growth while analysts were predicting 1.6%. Manufacturing Production declined for -0.9% in October compared to 0.2% monthly growth previously. Industrial Production and Trade balance - all in red in the UK. Traders were rushing to buy put options for GBP/USD on that news. All of the cable pairs accelerated their plunge when British Prime Minister Theresa May had cancelled the Brext vote in Parliament which was scheduled for Tuesday. The question is why did she spend so many efforts to negotiate the Brexit deal conditions with the European Union if you cancel the vote in your own Parliament? Housing starts in Canada did not have a significant impact on USD/CAD while U.S. JOLTs Job openings slowed down somewhat which was not a huge surprise for traders after the NFP report last week though. The greenback was trading almost flat across the board, while U.S. equities reversed and continued climbing three days in a row after Monday.

Tuesday, December 11.

Australian and New Zealand reports were exactly in line with the market expectations, so the price action for AUD/USD and NZD/USD was mainly determined by the overall risk appetite led by U.S. equities recovering. Japanese data kept disappointing investors with Machinery orders and M2 stock figures declining further. Chinese data showed an improvement in New Loans in November, however, it’s a huge question whether is that news a good one for the second largest economy in the world, as traders and investors are concerned about the country’s growing external debt to GDP ratio. It feels like the Chinese government is trying to boost the falling economic expansions by injecting tons of new credits into the financial system which could have a negative impact on the long-term economic perspective. Average earnings and Employment Change improved in the UK, signalling a potential growth in consumer spending which is important for the Bank of England. However, the demand for GBP/USD call options was short-lived as the political situation and Brexit uncertainty kept weighing on traders’ sentiment. The sterling kept plunging versus its major peers. Meantime, EUR/USD was climbing higher above 1.1400 psychological rates as European ZEW economic survey was not so bad as many analysts were predicting earlier. The decline is still on the cards, however, its pace is not so scary. USD speculators were expecting U.S. Producer Price Index report which was released during the NY opening. PPI was in line with the expectations while Core PPI performed better-than-expected in November. Trump’s efforts to keep oil prices at comparatively low levels were successful but core inflation excluding food and energy kept concerning the Federal Reserve. Anyway, the market comprehended that news as a positive one for U.S. stock indices which were rising on the risk appetite. Call options for the greenback were also dominating throughout Tuesday.

Wednesday, December 12.

Japanese data eliminated all of the expectations for the Bank of Japan to change anything in their ultra-soft monetary policy. Moreover, additional supportive measures could be imposed by the regulator as Machinery orders and PPI inflation declined in the country, slowing down the economic growth momentum. In contrast, USD/JPY was trading in a call-mode due to the global equities rallying. An interesting situation happened in emerging markets as well. South African inflationary reports showed an acceleration in both PPI and CPI figures which forced traders buying put options for USD/ZAR on expectations that South African Central Bank will keep hiking the interest rates. The pair fell to 14.10 support from 14.40 resistance earlier. OPEC monthly report, as well as crude oil inventories in the United States, did not convince oil traders to start buying call options for black gold. The global demand is still falling while OPEC members failed to agree about the output cuts, signalling further oversupply issues. WTI Crude oil price fell 1.77% as the weekly result, nearing $50 per barrel. The U.S. traders were also monitoring CPI report in the light of the upcoming Federal Reserve meeting and rate decision this week. Core reading was exactly in line with the market consensus while headlining Consumer Price Index even stagnated in November on a monthly basis while 0.1% growth was predicted before. Equities kept rallying while the greenback was trading in the put-options mode on expectations that the Federal Reserve would not accelerate tightening the financial conditions in the United States.

Thursday, December 13.

Thursday was the day of reversal in binary options markets as most of the assets changed the price action to the put-mode. First, ECB left the interest rates unchanged with much more dovish press-conference by President Mario Draghi. Second, developing markets declined as the Chinese macroeconomic data worsened with Retail Sales and Manufacturing PMI leading the weakness. The most fears were caused by IMF, cutting its global economic forecast in 2019. Trade war fears also influenced traders’ sentiment as the Huawei story did have a negative development, raising questions about the trade deal between the U.S. and China.

Friday, December 14.

 Weekly Binary Options
Source: FiNMAX


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