Weekly Binary Options Setups (May 2nd – 6th)

BinaryOptionsNow | Published on May 2, 2011 at 9:28 am

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NEW YORK (Binary Options Now) – The U.S. Dollar extended its losses last week, continuing its slide against all the other major currencies. The decline was due in part to the Federal Reserve’s dovish stance on interest rates, as well as mixed economic data out of the United States.

The U.S. Dollar was also pressured by commodity prices, which remain high. The price of gold made yet another all time high on Friday, trading as high as $1,569. The precious metal’s price also made another new high early Monday, reaching $1,575 per ounce.

Trading continued on the light side last week, as the week was shortened by the Easter Monday Bank Holiday. In addition, the Royal Wedding on Friday further shortened the business week in the UK.

The Euro gained +1.8% last week due in part to the U.S. Federal Reserve keeping the Fed Funds Rate at 0.0 to 0.25% for “an extended period”. In addition, economic data out of the Eurozone added support to the rate.

The Australian Dollar continued being the strongest currency last week, due in large part to the bullish move in the price of gold. The Aussie gained an impressive 2% last week, while the Kiwi was up a more modest 1% and the Loonie only rose 0.8%.

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. Swiss Retail Sales

The Swiss Federal Statistical Office will release its closely watched Retail Sales data on Monday that reflects the change in the total value of inflation adjusted sales, excluding autos and gas, observed at the retail level.

Swiss Retail Sales is currently expected to come out at the 2.3% level, versus the 1.5% level seen the previous month.

Due to the volatility that the release of this key indicator can cause 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 Swiss Retail Sales data results in a significant move in the underlying currency pair.

2. Australian, Eurozone and UK Rate Decisions

The Reserve Bank of Australia will release its latest Rate Decision on Tuesday by means of a Rate Statement. The central bank is expected to leave its benchmark Cash Rate unchanged at 4.75%.

In addition, the UK’s Bank of England will announce its Rate Decision on Thursday in which the central bank is expected to keep its Official Bank Rate steady at 0.50% and its Asset Purchase Facility at 200B. The MPC will also release a Rate Statement.

Finally, the European Central Bank will also make known its Rate Decision on Thursday. The ECB is expected to maintain its Minimum Bid Rate at 1.25% and will hold an associated Press Conference to discuss its decision.

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 the AUD, GBP or EUR against the USD could be a way to profit if one or more of these Rate Decisions indicates present or future hikes in benchmark interest rates.

3. U.S., Canadian and New Zealand Employment Reports

Each of these countries will release its latest Employment data this coming week. First will be the U.S. ADP Non-Farm Employment Change out on Wednesday that is expected at 202K, followed by the key U.S. Non-Farm Payrolls and Unemployment Rate indicators on Friday that are expected to come out at 185K and 8.8% respectively.

Furthermore, the New Zealand Employment Report due out Wednesday is expected to show 0.6% for the Employment Change and 6.7% for the Unemployment Rate, while the Canadian Employment Report out on Friday is expected to show 15.2K for the Employment Change and 7.7% for the Unemployment Rate.

Variations in these key labor sector numbers can significantly affect forex rates that involve the respective currencies, so a forex binary options strategy of buying a binary call option versus another major currency like the Euro might be profitable if the employment data results are better than the market’s consensus.

4. U.K. House Price Indexes

Two important UK building societies will release their house price data during the coming week. The first number due out is the Halifax HPI on Tuesday that is forecast to rise by 0.2%. The second is the Nationwide HPI on Wednesday that is expected to rise by 0.3%.

Lower than expected house price 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 HPI data comes out significantly worse than the market is expecting.

5. UK PPI

The UK Office for National Statistics will release its Producer Price Index data for last month on Friday. This key inflation number gives indications about future monetary policy decisions by the MPC, and it has extra significance because it is released ahead of the CPI data.

The market consensus for the PPI Input release is +1.7%, versus last quarter’s +3.7% rise, while PPI Output is expected to rise by a more modest 0.7% versus its previous 0.9% gain.

Higher PPI numbers may propel Sterling to new recent highs with the possibility of a BOE rate hike as a measure to deter further inflationary tendencies in the UK. Nevertheless, a lower number could indicate that the BOE would likely leave its benchmark Official Bank Rate unchanged.

Purchasing a binary GBP call/USD put option could give the forex trader possibilities for a profitable trade if the inflation number comes out higher than expected, while buying a binary GBP put/USD call option may take advantage of profit taking in the currency pair if the PPI data is significantly lower than expected.

Nevertheless, given the uncertainty over the PPI result, a combination involving buying a strangle or straddle may be a preferable forex binary option strategy to use over this economic release.

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