Weekly Binary Options Setups (April 26th – April 29th)

BinaryOptionsNow | Published on April 26, 2011 at 1:57 pm

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NEW YORK (Binary Options Now) – The U.S. Dollar declined against all the other major currencies last week. The main reason for the decline was S&P cutting its outlook for the United States from stable to negative. Nevertheless, the rating agency left its sovereign debt rating at AAA.

Also weighing on the Greenback was a combination of higher crude oil prices and a new all time high in the price of gold, which reached $1,511.90 on Friday. In addition, currency traders took long positions in higher yielding currencies like the Australian Dollar, which also made a new post float high against the Greenback.

Trading was light last week, as the week was shortened by the Good Friday Bank Holiday celebrated by most major currency nations. Nevertheless, Sterling made a new long term high rising to 1.6512 after a higher than expected UK Retail Sales number out on Thursday.

The Euro gained +0.8% last week due in part to favorable results from a Spanish bond auction on Wednesday. Also supporting the rate were positive German and Eurozone PMI numbers out on Tuesday.

The Australian Dollar was the strongest currency last week, making a new post float high of 1.0773 and closing the week +1.7% higher. The Canadian Dollar also made a new long term high against the Greenback, with the USDCAD exchange rate trading as low as 0.9453 and then closing at 0.9541 to show a net decline of -0.6% 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 that may well affect the forex market considerably include:

1. Australian CPI

The Australian Bureau of Statistics will release its Consumer Price Index for the first quarter of 2011 early Wednesday. This key inflation number gives indications on monetary policy by the RBA. The market consensus for the release is +1.2%, versus last quarter’s +0.4% rise.

A higher number may propel the Aussie to new post float highs with the possibility of an RBA rate hike as a measure to deter further inflationary tendencies. Nevertheless, a lower number could indicate that the RBA would leave interest rates unchanged or even reduce them if the number is significantly lower.

Purchasing a binary call option in AUDUSD could give the forex trader possibilities for a profitable trade if the number comes out higher than expected, while buying a binary put option may take advantage of profit taking in the currency pair if the number is significantly lower than expected. Given the uncertainty over the result, a combination involving buying a strangle or straddle may be the most profitable forex binary option strategy to play this economic release with.

2. U.S. and New Zealand Rate Decisions and Statements

The U.S. Federal Reserve Bank will release its latest Rate Decision on Wednesday by means of an FOMC Statement and Press Conference. The central bank is expected to leave its benchmark Federal Funds Rate unchanged at <0.25%.

In addition, the Reserve Bank of New Zealand will announce its Rate Decision later the same day in which the central bank is expected to keep its Official Cash Rate steady at 2.50%. The RBNZ will also release a Rate Statement.

Either a rate rise or more hawkish than expected comments can benefit the respective currencies, so a forex binary options strategy of buying a call on either the USD or NZD against one of the other major currencies could be a way to profit if either Rate Decision signals future benchmark interest rate hikes.

3. U.K. Preliminary GDP

The U.K. Office for National Statistics will release its quarterly Preliminary GDP data on Wednesday. The closely watched economic growth data measures changes in the inflation adjusted value of goods and services generated by the UK economy.

Furthermore, the preliminary result is the first of the GDP data to be released, and hence has the greatest impact on the forex market. The outcome is expected to improve to 0.5% compared to the disappointing -0.5% observed the previous quarter.

Lower than expected GDP growth will tend to weaken Sterling, so buying a binary GBP put/USD call option can be a profitable forex binary options strategy if the UK Preliminary GDP data comes out significantly worse than the market is expecting.

4. U.S. Pending Home Sales

The U.S. National Association of Realtors is scheduled to release the latest Pending Home Sales data on Thursday. The current market consensus for the numbers is a lower rise of 1.6% for Pending Home Sales compared with its former 2.1% gain, although New Home Sales out on Monday were better than expected.

Variations in this key housing market number can significantly affect forex rates that involve the Greenback, so a forex binary options strategy of buying a USD Call option versus another major currency like the Euro might be profitable if the U.S. Pending Home Sales results are better than the market’s consensus.

5. KOF Economic Barometer

The KOF Economic Research Agency will release its closely watched KOF Economic Barometer on Friday that reflects the level of a composite index based on results for twelve key indicators pertaining to the Swiss economy. The KOF Economic Barometer is currently expected to come out at 2.20, versus the 2.24 level seen the previous month.

Due to the volatility that the release of this index can prompt for the Swiss Franc, a forex binary options strategy of buying a strangle in USDCHF could be a limited risk way to profit if the KOF data results in a significant move in the underlying currency pair.

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