The world’s reserve currency - US dollar - was trading with a mixed bias versus its major peers during this past week. So, binary options for EUR/USD were climbing initially towards 1.1550 resistance as traders were mostly buying call options for the pair. However, geopolitical fears and macroeconomic concerns forced traders to switch their attention to put options and EUR/USD fell sharply, finding the weekly bottom around 1.1300 technical support. There was also a huge story about the Japanese Yen which gained a sudden strength mid-week. USD/JPY plunged for more than 400 pips in one single hour right after New York close on Wednesday night. Several rumours were circulating in the binary options markets, including speculations that hedge funds bargain hunters managed to move the market during thin trading hours as Japanese traders were also off due to the holidays.
Monday and Tuesday were actually choppy as most of the countries were celebrating New Year. The only story worth noticing was a sudden gap in the EUR/USD chart when trading stations worldwide switched the calendar to 2019 in New York opening on January 1. The economic calendar was also empty, excluding Chinese Caixin PMI Report which showed another month of decline in manufacturing activity of the second largest world’s economy in December. That was the first bell indicating some significant shifts in investors’ mood during the past week.
Wednesday was much busier as traders started to come back to the trading terminals after the celebration. European trading session started with several significant macroeconomic data, underlying an uncertain and mixed outlook in the Eurozone. So, German, French and EU Manufacturing PMI were flat in December, matching the market expectations, while Spain reported a slight decline of the index (51.1 versus 52.2 expected). Despite an improvement in Italian data, EUR/USD kept declining as traders were buying call options for the greenback across the board on safe-haven flows. In contrast, British Manufacturing PMI report showed a significant improvement in December (54.2 vs 52.6) with upwards revision for the previous month (53.6 vs 53.1). That positive news could not be ignored by the sterling traders and call options were in demand, especially versus the single European currency. Manufacturing PMI was the only report in the United States and it also missed the analysts’ forecasts (53.8 vs 53.9), reinforcing rumours and fears of a potential slowdown in the largest economy worldwide. US stock indices were trading with a mixed bias as binary options traders were uncertain.
Thursday started too early. It was a period when most of the US traders already went home, closing their terminals, European traders were sleeping, while Asian traders did not wake up yet. That was a perfect time for hedge funds pirates who managed to perform their lovely trick pushing the markets down heavily. The news trigger was related to an announcement by Apple about the sales cut and bad Chinese outlook in the scope of local demand. Traders rushed to buy put options massively choosing multiple ranges of asset classes. Major US stock indices plunged 2% on average in New York after-hours. USD/JPY was hit the hardest, dropping 4% to the lowest rates in several months (104.80 yen per dollar). Pound, Aussie and Kiwi were also vulnerable to the brutal sell-off with cross rates AUD/JPY, NZD/JPY and GBP/JPY charting a huge long tail on the hourly candlestick. Some of the news agencies explained that crash as a computer-driven mistake and once traders came back to the terminals, most of those assets started to recover slowly. However, the damage has been already done and most of the global stock indices were declining throughout the whole day. Worse-than-expected Construction PMI report in Britain added fuel to the fire for the Pound pairs, EUR/USD options were also trading in the put mode. ADP Employment report was mixed in the United States, while ISM Manufacturing PMI declined. That factor had even more influence on traders’ sentiment, lifting the safe-haven flows for USD call options. The only positive market was noticed in WTI Crude and Brent oil options. Traders were rushing to buy call options for the black gold as Saudi Arabia and OPEC announced a significant output cut, stabilizing the oversupply issue. US Crude Oil Inventories report was also positive for speculators.
Friday did not promise anything like that initially. Choppy slow trading in Asian and European sessions was noticed as global investors were expecting two extremely important events for the binary options market - US Non-Farm Payrolls report and Federal Reserve Chairman Powell’s speech. Chinese Caixin Services PMI report was almost ignored with a postponed reaction for high-yield currencies. British Nationwide HPI declined in December, causing a slight selling pressure on the Sterling pairs. EUR/USD options were trading without any direction amid another mixed pack of macroeconomic data. Services PMI grew in Spain and France, declining in Germany and across the European Union. German Unemployment was surprisingly strong, while EU inflation figures were disappointing. What happened next was a real surprise. First, NFP suddenly jumped in December, adding 312 thousand jobs, while the market consensus was predicting modest 177K. Moreover, the November’s report was revised up to 175K from 155K, and average hourly earnings increased by 3.2%. That was positive for US equities, which started a huge rally. Call options for the US dollar were also in demand initially, at least until Powell started his press conference. He was unexpectedly dovish in his speech, signalling a possible pause in the interest rates hikes cycle. Fed funds futures started to point even to a possible rate cut, while talks about two rate hikes were circulating in the markets just three weeks ago. Binary options for the greenback and equities showed an inverse correlation as call options were in demand for stock indices, while put-options trade dominated for the US dollar versus all of its major peers.