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Friday’s Risk On Session Sees Dollar Weaken

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Binary Options News : October 14, 2012

binary options news caricature of José manuel barroso with euromanFriday’s Risk On Session Sees Dollar Weaken

The news that Spain is getting closer to officially requesting financial bailout sparked a risk on trading session that saw investors move into high yield currencies and move out of safe haven positions in the USD and Commodities.

Market talk that Spain is nearing a bailout was heightened by the credit ratings agency Standard & Poor’s lowering Spain’s long term credit rating to ‘BBB-’ from ‘BBB+’ and reducing its short term credit rating from ‘A-2′ to ‘A-3′, citing Spain’s deepening economic recession as limiting the Spanish government’s policy options whilst stating that rising unemployment and spending constraints will probably add to the social discontent and friction between Spain’s central and heavily indebted regional governments. A bailout would give the European Central Bank the ability to intervene and purchase Spanish sovereign debt thus lowering the borrowing costs for the troubled country.

The University of Michigan/Reuters consumer sentiment index for October released on Friday provided a surprise piece of positive data with the index climbing to a seasonally adjusted 83.1 from 78.3 in September after analysts had predicted a fall down to 78.0.Also producer price inflation in the US increased more than expected in September, with the Department of Labor in the US reporting that its producer price index increased by a seasonally adjusted 1.1% from the 1.7% reported in August. This surpassed the analyst predicted increase of 0.7% for the previous month.

Stocks

US stocks finished mixed to lower on Friday, experiencing its biggest weakly retreat since June, with solid consumer sentiment data and JPMorgan Chase earnings being shrugged off by investors who sold on worries that overall earnings will disappoint as the global economy continues to cool. The close of US trading saw the Dow Jones Industrial Average increase marginally by 0.02%, whilst the S&P 500 index fell 0.30% and the Nasdaq Composite index dropped by 0.17%.

Currencies

The USD was mixed to lower against most of the major currencies, meanwhile, down, 0.20% at 1.6078 against the GBP, down 0.32% against the AUD and down 0.25% against the CHF. The dollar was up however against the JPY, up 0.09% at 78.41 and up 0.10% at 0.9796 against the CAD whilst up 0.03% at 0.8176 against the NZD. The US dollar index, which measures the greenback against a basket of six weighted currencies, was down 0.17% at 79.74.

The Week Ahead

In what promises to be a busy trading week ahead these are The 5 most important event risks next week that look likely to cause market volatility in chronological order:

1. US Retail Sales
2. Minutes from Reserve Bank of Australia’s Monetary Policy Meeting
3. Minutes from Bank of England Monetary Policy Meeting
4. Chinese GDP
5. EU Leaders Summit

 

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Disclaimer: The opinions expressed in this article are not necessarily those of OptionsClick, blog.optionsclick.com, OptionsClick.com or any of its staff. The contents of this article are in no way intended to be advice or any other form of counsel for any trader of binary options or any other investor. Please be advised: Investing of any kind always carries a relative risk. As with any market trading, it is always possible to lose your investment. Always be sure to do your own research, seek professional advice, and make your own, well-educated decisions when it comes to financial investments.

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Greek Bailout Funding Fuels Risk Appetite

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greece road to recovery binary options cartoonInvestors moved out of the USD and into more risky positions as Greece was awarded the second tranche of bail out money with the EU after extensive negotiations with its private creditors last week produced a debt restructuring deal enabling a loan default prevention in time for its loan repayment due on March 20th. Europe is a key export market for Asia and news of clearer skies ahead in Europe boosted stocks in Asian trading – the Japan Nikkei 225 was up 0.09%, trading at 9899.08 whilst Hong Kong’s hang seng saw a 1.00% increase, trading at 21345.66.

The Euro made gains against most major currencies with the EUR/JPY experiencing a high of 108.52 after a low of 108.17, currently settling up 0.20%, trading at 108.40. The Euro was up 0.11% against the USD, trading at 1.3170 as investors cashed in on gains made yesterday and moved out of the greenback. The US Dollar index which measures the USD against a basket of 6 currencies was down 0.09%, trading at 80.21.

The weakened US Dollar meant there were gains made in the commodity markets. Gold was up 0.23%, trading at 1703.75 whilst Silver increased 0.92%, trading at 33.722. In US trading gold broke a key support level of $1,700 a troy ounce level on concerns that the Fed’s monetary policies will not become any looser as well as fears that Chinese growth; a major buyer of gold, may be slackening.

Today there is much to inspire market volatility and investors should look out for:

8.19am GMT – JPY – Press Conference by the Bank of Japan

11.00am GMT – Euro  - German ZEW economic sentiment survey (previous 5.4, forecast 10.6)

1.30pm GMT – USD – Core retail sales figures released in the US (MoM) (previous 0.7%, forecast 0.8%)

 

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Disclaimer: The opinions expressed in this article are not necessarily those of OptionsClick, blog.optionsclick.com, OptionsClick.com or any of its staff. The contents of this article are in no way intended to be advice or any other form of counsel for any trader of binary options or any other investor. Please be advised: Investing of any kind always carries a relative risk. As with any market trading, it is always possible to lose your investment. Always be sure to do your own research, seek professional advice, and make your own, well-educated decisions when it comes to financial investments.

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Buck finds support after equities sell-off

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USD Finds Support After Equities Sell Off

the american dollar is more popular than the euro once again - binary options cartoon for optionsclick blog

The greenback is back

Weaker-than-expected consumer confidence and home price figures released in the US sparked an equity sell off which saw the USD regain favor as a safe haven currency and recoup much of the losses on Tuesday.

The EUR/USD was down 0.397%, trading at 1.3032 as mixed signals emanating from the EU summit and the Eurozone tested investor patience and confidence in the EUR. There is still no resolution in the Greece debt restructuring talks and the uncertainty of a deal being finalized after a solid week of talks helped push the EUR down in Asian trading.

Despite better –than-expected unemployment figures coming from Germany, the largest economy in the Eurozone, yields increased in a Portuguese debt auction held in yesterday, increasing the cost of borrowing and adding further pressure on the EUR. Unemployment in the Eurozone reached a record high, up from 10.3% to 10.4% with Spain the highest at 22.4% and Austria the lowest at 4.1% The EUR/JPY was also down, falling 0.469%, trading at 99.32, as investors sought refuge in safe havens.

The news in the US took the markets a little by surprise as the S&P/Case-Shiller House Price Index came in lower than hoped for the month of November, whilst consumer confidence figures fell in January, catching the markets off guard. The weak economic indicators caused investors to cash in on recent increases in the US equities market making it a trading session full of buying the greenback and selling stocks.

The strengthened USD saw a fall in Gold and Silver with Gold down 0.22%, trading at 1736.65 and Silver down 0.32%, trading at 33.155. However, if Greece does settle its debt restructuring today, as expected there could well be support for the EUR which would see a fall in the USD and a rise in the precious metals and the EUR.

 

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Disclaimer: The opinions expressed in this article are not necessarily those of OptionsClick, blog.optionsclick.com, OptionsClick.com or any of its staff. The contents of this article are in no way intended to be advice or any other form of counsel for any trader of binary options or any other investor. Please be advised: Investing of any kind always carries a relative risk. As with any market trading, it is always possible to lose your investment. Always be sure to do your own research, seek professional advice, and make your own, well-educated decisions when it comes to financial investments.

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Even with EUR gloom, markets turn on USD

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Markets Turn on USD Despite EUR Gloom

USD v. EUR binary options editorial comic strip for optionsclick news update service

Who's pushing who currently?

Despite a raft of negative data coming from Europe over the last 24 hours, the markets found enough hope coming from the EU Summit to ditch the USD and find favor in the EUR.

The USD fell against major currencies and the EUR made gains even though a fiscal pact between the 27 member states designed to enforce budget discipline was rejected by both Britain and the Czech Republic.  However, the focus on reducing unemployment down to an average of 10% and talks on support small and medium sized businesses was enough to persuade investors to cash in gains made in the USD yesterday and pile in to more risky positions and commodities.

Also coming from Europe yesterday was the news that France, the 2nd largest economy in the Eurozone, reducing its growth forecast for 2012 from 1%, down to 0.5%. However, the IMF still expects the French economy to grow by just 0.2% this year, down from a revised 1.4%.

There was more trouble for Spain. Last week it announced that unemployment at 22% was at its highest level for 17 years, with 48% of all 16-24 year olds unemployed, twice the Eurozone average. Yesterday, the Spanish statistics office confirmed that the Spanish economy contracted by 0.3% in Q4 of 2011, fueling speculation of a recession in Spain.

With no debt deal yet to be agreed in Greece, investors still found enough hope coming from the EU Summit to cause a rally in the EUR. The EUR/USD was up 0.350%, trading at 1.3189, whilst the EUR/JPY was up 0.221%, trading at 100.57. There were also gains made in the GBP/USD, up 0.169%, trading at 1.5736 and in the AUD/USD, up 0.330%, trading at 1.0634, as investors abandoned the greenback.

The weakened USD saw a rally in commodities, with much of the losses recouped from yesterday. Gold was up 0.29%, trading at 1739.45 and Crude Oil was up 0.60%, trading at $99.38 a barrel.

Today will be dominated by events in Brussels as the last day of the two day summit should spark some volatility in the market. Expect investors to wait and see what happens but some intraday volatility caused by profit taking.

 

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Disclaimer: The opinions expressed in this article are not necessarily those of OptionsClick, blog.optionsclick.com, OptionsClick.com or any of its staff. The contents of this article are in no way intended to be advice or any other form of counsel for any trader of binary options or any other investor. Please be advised: Investing of any kind always carries a relative risk. As with any market trading, it is always possible to lose your investment. Always be sure to do your own research, seek professional advice, and make your own, well-educated decisions when it comes to financial investments.

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Greenback falls on pledge of Fed Rates

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“USD Falls on Fed Rates Pledge”

the greenback falls thanks to stepping off the interest rates cliff's edge and fortunate has the parachute of the 2012 elections to enjoy a softer landing, in this binary options editorial cartoon for optionsclick blog

What color is your parachute?

The USD fell against most currencies in Asian trading as the Federal Reserve of the US surprised markets by saying it does not expect to raise interest rates until towards the end of 2014. The announcement made in its regular policy statement emphasized the ‘significant downside risks’ the US economy was facing and kept the target rates of between 0 – 0.25%. This despite 3 of the 17 committee members thinking rates should be increased by the end of 2012.
The forecast growth for 2012 was cut slightly, down to a range of 2.2 – 2.27%, this from the previous 2.5%-2.9%. However, on a more positive note, unemployment forecasts were down to 8.2% from 8.5%.
The Fed announcement took the markets by surprise, and after a week of safe haven seeking investors pushing the price of the USD up, the EUR/USD was up 0.084%, trading at 1.3118, whilst in the Cable, the GBP/USD was up 0.019%, trading at 1.5660.
The weakened USD saw a rise in both Gold and Crude Oil. Gold continued the week long rise, posting a 0.61% increase in Asian markets, trading at $1710.55 an oz, whilst Crude Oil broke the $100 a barrel once more, trading at $100.19 a barrel, a rise of 0.80%.
The weaker greenback also encouraged some bullish action on the stock markets as the US SPX 500 was up 0.87%, settling at 1326.06 and the US30 was up 0.66%, trading at 12758.85 as US stocks and shares became cheaper for investors.
Today investors should look out for comments and press statements made from the World Economic Forum Meeting held in Davos today. The meeting attended by central bankers, prime ministers, finance ministers and business leaders from more than 90 countries usually generates market volatility as meetings are mostly open to the press and statements made to the press throughout the day.

 

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Disclaimer: The opinions expressed in this article are not necessarily those of OptionsClick, blog.optionsclick.com, OptionsClick.com or any of its staff. The contents of this article are in no way intended to be advice or any other form of counsel for any trader of binary options or any other investor. Please be advised: Investing of any kind always carries a relative risk. As with any market trading, it is always possible to lose your investment. Always be sure to do your own research, seek professional advice, and make your own, well-educated decisions when it comes to financial investments.

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