Post-Easter price action brought lots of surprises for the binary options market. The US dollar and US stock indices were in the market focus this past week. Traders rushed to buy call options for all dollar-nominated assets amid stronger-than-expected growth pace in the leading world’s economy. The uptrend could even accelerate next week in case if the US Federal Reserve took into the account recent improvement in the data. On the other side, Friday’s price action looked like a buy rumour sell fact rule, as investors did not continue buying the greenback despite positive surprise in the US Q1 GDP report. Nevertheless, call options for US stock indices were in demand as investors renewed all-time highs for significant benchmarks. Euro, Swiss Franc and Australian dollar were the weakest performers in the currency market. Oil prices retraced from multi-month highs, and gold recovered some of the previous losses.
Monday’s price action was still quiet as many exchanges were closed for the Easter holiday. US traders came back to work on Monday and call options for equities were in demand, while the trading volume, liquidity and volatility remained low. US Existing Home sales failed to impress investors, and the housing sector was the weakest among others. Chicago Fed National Activity Index declined in March.
The real trading came back to life on Tuesday, and binary options traders were full of optimism and risk appetite. US equities soared, leading the gains among stock indices, Euro and British Pound plunged, USD/JPY was hovering around the same levels as investors were expecting the Bank of Japan to meet for a rate decision later that week. Wholesale sales improved in Canada, but that did not support the Loonie as traders were buying call options for USD/CAD with a substantial volume. New Home Sales beat the market consensus in the United States. The US dollar index surged while emerging markets and commodity currencies were sold off. Even the WTI Crude oil price tried to join the party, testing the resistance level above $66.50 per barrel. Gold price and 10-year Treasuries edged lower on the back of risk appetite. The safe-haven Swiss Franc was sold-off as USD/CHF hit 2-year high levels above 1.0200.
Australian inflation disappointed investors, who rushed to buy put options for AUD/USD and AUD/JPY. The reason was that the Reserve Bank of Australia received a green light to cut the interest rates later this year on the back of lower inflationary pressures and slow economic growth. German Ifo Business Climate index fell for the third straight month, signalling a worse economic outlook in the Eurozone. Binary options traders did not hesitate to buy put options for EUR/USD, and the pair continued its two-day bearish rally with heavy losses in the exchange rate. The Loonie bulls were hoping for a hawkish statement by the Bank of Canada, which gathered for the interest rate decision. However, BoC officials expressed cautiousness about a potentially negative impact on the economic growth from global concerns. As a result, USD/CAD soared to 1.3500 for the first time since December last year. BoC Governor Poloz did not add any optimism as well. Meantime, Crude Oil inventories were published with a much higher level than it was widely anticipated. Oil traders rushed to buy put options for WTI Crude, which slid below $64 per barrel on Wednesday.
The Bank of Japan decided to leave the interest rates unchanged in the third largest world’s economy. The Monetary Policy Statement was somewhat cautious than optimistic and Japanese traders did not find any reason to sell the safe-haven yen, preferring to ignore the spike in global equities. BoJ officials insisted on the importance of following data before making any significant steps. Also, repatriation flows held USD/JPY from re-testing the resistance level of 112.00 yen per dollar. US Durable goods orders confirmed that the leading world’s economy is in good shape, stock indices rallied, but the greenback failed to continue the bullish run. Currency speculators started to buy put options for USD/MXN and other high-risk pairs.
The New Zealand dollar had found a bottom, and reversed versus the greenback, charting the highest gains among all major currencies on Friday. The main driver for such a wild price action was the trade balance report, which was published with a positive surplus seven times higher than economist were predicting. Chinese imports were among the critical factors for such a dramatic change in the external trade balance in New Zealand. NZD/USD was buoyant, charting gains above 0.6670 technical resistance levels. Industrial Production kept declining in Japan, leaving the USD/JPY currency pair hovering around the same levels. Australian PPI was released in the red, enlarging the fundamental divergence for AUD/NZD cross rate. The main surprise of the trading week was the US GDP report. The pace of the economic growth was much more robust than most of the analysts were forecasting. The US economy grew 3.2% in the first quarter of this year, while the market consensus was 2.3% growth. However, the US dollar did not proceed with the bullish rally as traders took a wait-and-see position for the US Federal Reserve meeting and rate decision next week. US stock indices bounced off the high levels, tested intraday support levels and reversed back to growth, finishing the trading week with a positive tone.
