› Weekly Binary Options market review February 18 - 22.

Weekly Binary Options market review February 18 - 22.

It’s hard to call this past week as volatile price action as binary options markets were seeking direction, consolidating around the previous week’s levels. The main explanation of that lies in the field of geopolitical tensions between the United States and China. Although some of the global stock indices were able to accelerate gains (especially Japanese Nikkei 225 was impressive) and the overall markets' sentiment was on the risk-on side, equities investors were cautious on the back of unclear result of U.S.Chinese negotiations. The thing is that the threat of new import tariffs imposed by the United States to Chinese goods worth 25 billion dollars is still weighing on the overall risk appetite. If Donald Trump suddenly changed his mind in the last minute (which happened many times before), then global traders would rush to buy put options for global stock indices (including the US) and call options for safe-haven assets. This is why the upcoming week is crucial to determine the binary options market direction for weeks if not months. Meantime, the Dow Jones Industrial Average benchmark printed gains above 26000 points for the first time since October’s crash, which reflected the overall investors’ sentiment last week.

This past week started with a quiet session on Monday as the economic calendar was almost empty and North American exchanges were closed on holidays: Washington’s Birthday in the United States and Family Day in Canada. However, some signs of the volatility were noticed in the Asian trading session when the Japanese Core Machinery Orders report was published. USD/JPY was edging slightly higher after more optimistic data than it was predicted earlier. Financial markets players were focusing on optimistic headlines from the weekend and the risk appetite was rising throughout Monday as the US-China trade talks were announced to start the next day. Binary options for the US dollar were trading in the put-mode across the board with EUR/USD and GBP/USD climbing North. There was also an interesting price action in Australian and New Zealand. Both currencies dropped sharply on heavy-volume put-options demand as rumours about more dovish comments from the Reserve Bank of Australia spread. The European trading session did not have any significant shifts in the fundamental environment, so EUR/USD was hovering around the same levels as on Friday last week.

Tuesday was much more volatile though. AUD/USD dropped sharply lower after the RBA minutes, which showed that the central bank is intended to cut the interest rates in 2019. Moreover, the regulator officials expressed lots of concerns regarding the current economic outlook, especially in the trade balance and employment sectors. The New Zealand dollar slid even more compared to Aussie as the last week's performance reached overbought levels for NZD/USD at 0.6930. Eurozone published its current account (weak) and the single European currency failed to grow at the same pace as the British Pound, for example. The main reason for that was related to macroeconomic reports from the United Kingdom. Although the Average Earnings index was released lower than expected (3.4% versus 3.5% predicted) and the Claimant Count Change failed to beat the market consensus in January (14.2K versus 12.3K), Employment change 3M/3M came in strong with 167.0 thousand jobs created compared to the forecast of 152.0K jobs. The bullish price action of GBP/USD and GBP/JPY was also supported by positive rumours from the Brexit side as British Prime Minister Theresa May had several achievements in negotiations with the European Union. German ZEW institute published its economic survey later, which showed that the economic sentiment index jumped in February in both Germany and the EU (-13.4 versus -14.1 expected and -16.6 versus -18.2, respectively). That news supported EUR/USD. The only interesting event in the United States (besides the beginning of a new negotiations round with China) was the FOMC member Mester's speech. The greenback kept trading with the put-option bias on Tuesday.

Theresa May
Source: Coffee House - The Spectator

Inflation in New Zealand failed to support NZD/USD and the Kiwi kept plunging versus major currencies on Wednesday. The Japanese Trade Balance report was also negative for high-yield currencies. The negative surplus had been widened to -1415 billion yen in January, compared to the expectations of -1011 billion yen. Exports fell sharply in January (-8.4% year-over-year versus -5.5% predicted) while imports slipped slower-than-expected (-0.6% vs -2.8% forecasted). The Adjusted Trade Balance figures were negative as well (-0.37 trillion yen versus +0.17 trillion expected). That was definitely negative for USD/JPY which dropped lower after the report. Moreover, such a disappointing data forced the Bank of Japan talking about more supportive measures for the export-oriented economy. Wage Price index was almost flat in Australia. South African inflation data was completely negative for the Rand and USD/ZAR kept edging higher despite the large demand for put options for the greenback across the board. The main event of the week was the FOMC minutes published later on Wednesday. The statement showed that the Federal Reserve officials are not sure about the monetary policy perspective and measures needed to be imposed in the nearest future. Anyway, the market players keep pricing in a scenario which suggests at least one rate cut by the US regulator this year.

Thursday was mainly directionless for the vast majority of assets in the binary options market. Although Australian Employment CHange showed a bounce up to 39.1 thousand jobs created in January, the call-mode trading was limited for Aussie options. The New Zealand dollar was also trying to recover previous losses versus the greenback as Asian investors were absorbing the more dovish FOMC minutes than it was anticipated previously. Manufacturing PMI declined in Japan in January, adding more fuel to the fire of more dovish BoJ in March. A huge set of macroeconomic data was released in Europe on Thursday. German and French Consumer Price index came in line with the expectations, while Purchase Managers Index was not so clear. French Services and Manufacturing PMI surprised traders on the positive side, German Manufacturing PMI declined, while the Eurozone figures were mixed. The European Central Bank had published its meeting minutes later and the result of all that news was that EUR/USD failed to hold gains around 1.1400 and slipped lower towards 1.1334 level. The US data was also mixed with the durable goods orders report in green and Philadelphia Manufacturing Index and Housing sector data in the red. Thursday was also a huge day for oil traders and USD/CAD speculators. First, the US crude oil inventories report showed an increase in stocks (3.6 million barrels versus 3.0 expected), however, WTI Crude did not drop significantly, bouncing up together with Brent Crude price in London. Second, Canadian Wholesales report showed that the economic outlook isn't that bad as some of the Loonie bears would have expected. USD/CAD dropped below 1.3150 support as the result of two-days volatile price action after the Bank of Canada Governor Poloz spoke on Friday, expressing more hawkish views. Friday was completely quiet for most of the assets except US stock indeces which kept climbing.

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