Binary Option Setup of the Day: August 12th

BinaryOptionsNow | Published on August 11, 2011 at 12:01 pm

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As the Western world stands at the cusp of one of the greatest debt crises in modern history, the recent US credit rating downgrade by Standard & Poor’s has underlined that the dollar still rules foreign exchange trading all over the world.

Today’s daily Binary Option Setup will focus on the USD and relates to a US economic reading set to be released on Friday, August 12th at 12:30 GMT: US Retail Sales monthly data.

US Retail Sales data for July

The US Retail Sales is released on a monthly basis by the Census Bureau and measures all of the goods sold by retailers based on a sampling of retail stores of different types and sizes across the US.

The previous Retail Sales report number was released on July 14th and came out at 0.1%, which was quite positive since the previous forecast was for 0.0%. This month, the forecast is 0.5%.

This release is an important indicator of consumer spending and is also correlated to consumer confidence and considered as a pace indicator of the growth of the US economy.

Interpretation

A higher than expected reading (as in June, for example) is viewed as an upward force on the value of the dollar. Conversely, a lower than expected reading will indicate that the economy is weakening due to falling demand, which often results in a drop in the value of the dollar.

Binary Option Setup

One possible way to profit from the release of the US Retail Sales data may be by investing in an EUR/USD forex binary option if the reading is much higher or lower than the forecast.

Should the reading be higher than expected, this could indicate that expectations for the USD are positive and the dollar may in turn be buoyed by these expectations and increase in value against the EU’s single currency. In this case, an investment in a put EUR/USD binary option at or around the release of the Retail Sales figures may finish in-the-money.

If, on the other hand, the US Retail Sales figures come out way below expectations, the USD may be negatively impacted by this data and lose ground against its EU counterpart. In that case, a call on an EUR/USD binary option investment made at or around the release of the data may finish in-the-money.

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Remember, the financial markets are constantly being influenced by myriad factors so there is no guarantee that this strategy will always work in your favor. However, when used appropriately, a binary options investment may allow traders to profit from market fluctuations caused as a result of the release of sensitive economic information such as the US Retail Sales.

 

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