› Weekly Binary Options market review March 18 - 22.

Weekly Binary Options market review March 18 - 22.

What a trading week that was! The binary options market had every ingredient needed to shoot an action movie. There was intriguing plot development, unexpected turn and dramatic end, lots of cinema directors and producers would have been envious not to have such a scenario in their portfolio. The price action for many financial instruments was rather wild due to the several crucial events happening in the monetary policy field, geopolitics and macroeconomic side of things. Global traders were buying put options for the US dollar massively before the US Federal Open Market Committee’s meeting and rate decision. The trading volume even surged right after the economic statement released by the regulator, while heads were cooled by Federal Reserve Chairman Powell during his press conference. Greenback options charted a huge U-turn on Thursday and completely recovered all of the previous losses on Friday. US equities rallied to 6-months highs but failed to hold gains and slipped back to where the trading week started. Euro was soaring to 6-weeks resistance at 1.1450 versus the greenback but macroeconomic data showed that the European Union is heading into recession and traders rushed to buy put options for EUR/USD, dropping the pair to 1.1300 support. The Japanese Yen was gaining strength on the back of risk aversion, gold and government bonds soared due to the flight in safety, European stock indices plunged 2.50%. Binary options for the British pound had an extremely volatile trading week as economic data was positive, the Bank of England stayed pat on the interest rates, while the Brexit saga had a pessimistic development.

The trading week started comparatively quiet with an optimistic Japanese trade balance report which showed that things arent’s as bad as many economists complained earlier. The headline figure of +339 billion yen was strong enough to beat the market consensus of +310 billion compared to the plunge in the previous month (-1416 billion). But that surplus was gathered by much lower imports volume (-6.7% versus -5.8% predicted and -0.8% earlier), while exports kept declining at a faster pace (-1.2% versus -0.9% expected and -8.4% earlier). The mixture of that data did not have a significant impact on USD/JPY as binary options traders were expecting the main event of the week - the Federal Reserve meeting and rate decision. European trade balance, in contrast, remained positive in January (+1.5B), while analysts were predicting a much softer figure of -0.8B. But the surplus was narrowed significantly compared to +17 billion in December 2018, so EUR/USD did not have any meaningful support. The only important event in North American markets was the release of Canadian Foreign Securities Purchases, which improved in January. As a result, put options for USD/CAD were in demand, while WTI Crude oil was climbing north towards $60 per barrel.

Tuesday started with the Reserve Bank of Australia publishing recent meeting minutes. The statement showed a moderate dovishness of the regulator which was not big news for Aussie traders. But AUD/USD failed to maintain positive bias after RBA Assistant Governor spoke in a press conference, pointing to several key risks for the Australian economy including the global economic slowdown which hurt local exports. Another surprise came in from the UK data. Average earnings surged 3.4% in January, 3-months employment change increased to 222.0 thousand jobs added, while the unemployment rate dropped to 3.9%. Call options were in demand for all of the Sterling pairs including GBP/USD and GBP/JPY. German ZEW institute published an economic survey, which showed mixed results for the largest European economy. Current conditions worsened but the general economic sentiment improved. The Eurozone ZEW report was much worse though. US Factory orders grew slower-than-expected in January (0.1% versus 0.3% predicted), and that was not a positive event for US stock indices which remained under slight put-options pressure throughout Tuesday.

Wednesday was the huge day for the binary options market across the globe. New Zealand published financial updates and the current account showed a significant improvement in the fourth quarter of 2018 compared to figures predicted by analysts. Traders bought call options for NZD/USD and NZD/JPY currency pairs. The Bank of Japan’s monetary policy meeting minutes showed that the regulator is ready to act if needed. However, that did not prevent the Japanese yen from further strengthening as its major peers were weak, especially the greenback. Germ Producer Price Index missed the market expectations and Euro was pressured by put-options demand. British consumer prices increased the inflationary pressure on the Bank of England and traders rushed to jump in call options for the Sterling across the board. WTI Crude oil had an unexpectedly positive US inventories report, which showed a large decline of oil stocks last week (-9 million barrels compared to +0.3 million expected). Such a demand increase and supply shortage lifted WTI Crude price above $60 per barrel for the first time since November 12 2018. But that was just a beginning of real volatility as the global binary options traders were expecting the US Federal Reserve to announce the interest rates decision and economic statement. The financial conditions were left unchanged for the largest world’s economy and the statement did not have any sign of a possible tightening in the nearest future. As a result, the greenback plunged versus all its major peers including euro, pound, yen and Swissie. Commodity currencies gained strength as well. Huge long candles grew on hourly charts until Fed Chair Powell spoke in his press conference, stating that the regulator is ready to act and the key target is to tackle the inflationary pressure. At the same time, he mentioned the global economic slowdown hurting the US growth and troubles in US trade balance which is widening the negative surplus.

Weekly Binary Options market review March 18 - 22.

That greenback’s plunge was short-lived though. New Zealand and Australian dollars stopped rising on the back of weaker-than-expected economic reports. GDP and employment data was ugly for both currencies. The Swiss Franc failed to continue the bullish rally as the Swiss National Bank met for the interest rated decision, leaving the financial conditions unchanged and publishing a dovish statement on the local economy. British retail sales improved in February but bad news came in from the UK-EU divorce topic. Europeans refused to delay the Article 50 for too long, approving another deadline of May 22. The Bank of England expressed readiness to hike the interest rates in the UK on the back of strong macroeconomic reports but the Brexit uncertainty holds the regulator from doing so. As a result, the Sterling charted another day of weakness. US Philadelphia Fed Manufacturing Index grew and that caused a huge rally in US stock indices as equities investors were buying call options. NASDAQ was testing the highest levels since October 1, 2018, on Thursday. So, the greenback reversed and started recovering losses across the board.

What happened on Friday was a real shock for the financial markets. The European economy slipped into recession, officially. German, French and EU PMI report declined for three months in a row, and, what’s even worse, it dropped below the 50 basis points level, which divides growth from collapse. Put options were in demand for German and French stock indices, Euro versus any currency and USD/JPY as the risk appetite indicator. US equities were also vulnerable to fear among investors, oil price dropped back below $59 per barrel, gold price surged. The upcoming week is supposed to show how bad things are and should we see another round of bear market in the foreseeable future.

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