› Weekly Binary Options market review March 25 - 29

Weekly Binary Options market review March 25 - 29

The US government debt was in the binary options market’s focus last week. Investors were concerned that the yield curve had reversed to the negative, meaning that short-term yields became higher than long-term yields. That traditionally reflects fixed-income market players cautiousness about the economic growth in the long run and they prefer to sit on hard cash instead of investing in any asset. However, as history shows, a potential recession might start not earlier than in 12-18 months from now, so there is nothing to worry about for equities investors. Binary options for US stock indices kept trading in the call-mode this past week, European shares managed to recover some of the previous losses. Traders were buying call options for the US dollar versus euro, Japanese Yen and British Pound. Some of the high-yield currency pairs were trading in the opposite direction though. For example, USD/CAD weakened, while AUD/USD gained strength. In the commodities market, traders had a mixed sentiment as well. Put options were in demand for gold and silver, while WTI Crude oil was trading mainly on the call side.

Monday started with a comparatively quiet trading session in Asia and nothing promised such dramatic events as it happened later. German IFO survey showed that things are not that bad in the leading European economy as it was previously anticipated and EUR/USD started retracing North, recovering a part of previous week’s losses. Chicago and Dallas Fed National activity did not meet the market’s expectations in the United States, and the US dollar was trading on the put-side. The British Pound was trying to continue surging on the back of the general optimism but Theresa May failed to support that positive price action and GBP/USD slid back to where it started the day.

Binary options for the New Zealand dollar were initially positive on Tuesday as the country reported Trade Balance figures, which were able to surprise traders with optimistic reading before the RBNZ meeting scheduled for the next day. However, that really was short-lived and the US dollar’s strength was dominant across the board on Tuesday. Japanese economic data was reported in the red, Singapore Industrial Production dropped. The European data was mixed as French Business Survey was published worse-than-expected, GDP edged up slightly higher on the yearly basis but remained flat on monthly calculation. EUR/USD started reversing back down. US housing data was bad but CB Consumer Confidence was ugly. That negative surprise forced traders to buy put options for US stock indices, while US 10-year yields dropped. The US dollar, in contrast, gained strength as the world’s reserve currency.

British Pound
Source: France 24

The Reserve Bank of New Zealand stayed pat on the interest rates as it was widely expected. However, Governor Orr was surprisingly dovish, stating that negative economic data started overshadowing positive achievements of the local economy. It was surprising also because that was the guy who promised the market players a series of rate hikes this year. RBNZ changed mind, announcing a possible rate cut instead. As a result, NZD/USD plunged, breaking through several key technical support levels. EUR/USD accelerated the bearish run on the back of dovish comments by several ECB members including President Draghi. US Trade balance improved in January but December’s figures were revised down, so the general impression was mixed. Nevertheless, binary options investors kept buying call-options for the greenback. The main event for the WTI Crude oil market was the release of US Inventories. The report showed that oil stocks increased last week by 2.8 million barrels while experts were forecasting a decline of -1.1 million barrels. That influenced the demand for oil put options, prices fell. UK Parliament was gathering for another Brexit vote and it was unsuccessful again. The Sterling lost the ground versus every major currency on Wednesday.

Thursday started with Japanese data, which showed that investment flows in local equities declined but not as fast as economists were predicting. As a result, USD/JPY continued the bullish rally. European data was mixed but the pessimism persisted. Traders kept buying put options for EUR/USD and other euro cross-rates as German CPI was significantly weaker than expected. US Q4 GDP was revised down to 2.2% from 2.4% previously. PCE Price index was flat, while Consumer sending declined. US Pending home sales were also in the red. However, that did not stop traders from buying call options for US stock indices.

The Japanese yen continued weakening versus the US dollar on Friday as the Japanese CPI showed larger inflationary pressure, unemployment fell in February. British GFK Consumer Confidence and Halifax House Price Index were released much stronger than expected but that was completely ignored by the Sterling traders as all eyes were on the UK Parliament again. Unfortunately, British MPs refused to support the Brexit deal, Sterling dropped, EU leaders started getting ready for non-deal Brexit. Although the deadline was postponed till April 12, any positive scenario is off the table currently. German retail sales improved somewhat in March, however, that positive news did not support the single European currency in its freefall versus the US dollar. PCE deflator, Personal Income and Spending were reported on the weak side in the United States but the greenback refused to weaken. The fact that the Federal Reserve cannot hike the interest rates in such a fundamental environment was almost priced in by the market players. Government bonds were sold off but US stock indices finished Friday with another week on gains.

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