Weekly Binary Options Setups (April 11th – April 15th)

BinaryOptionsNow | Published on April 11, 2011 at 7:27 pm

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NEW YORK (Binary Options Now) – The U.S. Dollar declined against the other major currencies last week, with the sole exception of the Japanese Yen.

The Greenback and the Yen were both lower due in part to monetary flows favoring higher interest rate currencies, combined with higher commodity prices.

Furthermore, the week saw three rate decisions by major central banks. The Euro rose +2.1% on the week against the Greenback after the ECB raised its Minimum Bid Rate by 25 bps to 1.25%. Sterling gained +1.5% after the BOE left their Official Bank Rate unchanged at 0.50%, and the Asset Purchase Facility at 200B.

The Japanese Yen, the only currency to decline against the Greenback, lost -0.8% after the BOJ left its Overnight Call Rate unchanged at <0.10%. The Yen has once more become the favored funding currency for carry trades against significantly higher yielding currencies.

The commodity currencies were the strongest last week, with the Australian Dollar making a new post float high of 1.0551 and closing the week +1.8% higher, while the Kiwi gained +1.9%. The Canadian Dollar also made a new long term high against the Greenback, with the USDCAD exchange rate trading as low as 0.9525 and then closing at 0.9572 to show a net decline of -0.7% on the week.

Binary Option Setups For Upcoming Major Market Events

Several key fundamental economic data releases, which will be reported in the binary options news later this week will probably give traders interested in forex binary options trading considerable opportunities for profitable transactions.

These economic releases, which may well affect the forex market considerably include:

1. U.S., Canadian and UK Trade Balances

The United States, Canada and Great Britain are scheduled to release their respective Trade Balance data on Tuesday.

The current market consensus for the numbers is a deficit of -8.1B for the UK Trade Balance compared with its former -7.1B deficit. This UK data will then be followed by an expected -44.1B trade deficit for the United States versus the -46.3B deficit seen previously. The Canadian Trade Balance is currently in surplus, with the result expected at +0.7B versus the +0.1B number seen last month.

Variations in these key trade numbers can significantly affect forex rates, so a forex binary options strategy of buying a strangle in GBPUSD or USDCAD might be profitable if the results differ substantially from the market’s consensus.

2. BOC Rate Decision and Press Conference

The Bank of Canada will release its Overnight Night Rate decision on Tuesday. In it, the central bank is widely expected to keep its benchmark interest rate steady at the 1.00% level. Any deviation from this result — that is already priced into the USDCAD rate — will almost certainly increase volatility.

Furthermore, a BOC Press Conference will be held immediately following the release. Statements made in the wake of the decision can also influence the forex market’s direction for USDCAD.

The BOC Rate Decision and its subsequent Press Conference can offer the binary options trader good opportunities for profitable transactions on both the upside and the downside. A purchase of a forex binary options strangle or straddle on USDCAD or CADJPY may provide substantial ways to take advantage of the inherent volatility upon the release of this key economic information.

The binary CAD call option leg of this binary options strategy may profit if the BOC gives indications in its press conference that an upward rate change is the first in a series. Conversely, the binary CAD put option may benefit if rates decline or are deemed likely to do so in the near future.

 

3. G7, G20 and IMF Meetings in Washington D.C.

The G7 will be meeting on Thursday, the G20 on Friday and the IMF on Saturday in a series of high level global financial meetings scheduled to be held in Washington D.C. this week. The meetings often provide insights into global financial and economic conditions that may influence future exchange rate and monetary policy shifts, as well as changes in financial regulation.

Sometimes, the world’s central banks can participate in concerted central bank intervention after such meetings. Given the recent decline in the U.S. Dollar, such intervention may be targeted at boosting it.

Accordingly, a forex binary options strategy of buying a USD call against the other major currencies — especially the Japanese Yen — could be a way to profit if the Meeting Communiqués indicates that intervention may be imminent.

4. U.S. Inflation Data

The Bureau of Labor Statistics of the U.S. Department of Labor will release its latest inflation data this coming week. Changes in inflation can substantially affect monetary policy and economic conditions in the United States.

PPI and Core PPI data is due out on Thursday, with the first number expected to decline to 1.2% from 1.6% and the second expected to remain steady at 0.2%. On Friday, Core CPI and CPI data are scheduled for release, with Core CPI expected to remain steady at 0.2%, while CPI is expected to rise slightly to 0.6% from 0.5%.

Higher than expected inflation numbers can benefit the Greenback, so a forex binary options strategy of buying a USD call against one of the other major currencies could be a way to profit if the PPI or CPI data could signal future benchmark interest rate hikes by the Federal Reserve Bank.

5. U.K. Employment Report

The U.K. Office for National Statistics will release its monthly Employment Report on Wednesday. The closely watched Claimant Count Change measures changes in the number of people claiming for unemployment during the month and is expected to fall by -3.1K versus its previous -10.1K drop.

In addition, the U.K. Unemployment Rate is expected to remain steady at 8.0%, while the market’s consensus for the Average Earnings Index is a 2.6% rise versus its former 2.3% result.

An increase in unemployment will tend to weaken Sterling, as would a drop in the Average Earning Index. Accordingly, buying a binary GBP put/USD call option can be a profitable forex binary options strategy if the UK employment data comes out significantly worse than the market is expecting.

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