Binary Option Setups: Week of August 29th – September 2nd

BinaryOptionsNow | Published on August 28, 2011 at 12:48 pm

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In the wake of Federal Reserve Chairman Ben Bernanke’s speech at Jackson Hole on Friday, August 26th, the forex markets should fluctuate in relation to the following economic events set to occur this week.

Given that the Fed is not expected to change its monetary policy before September 20th – when the Fed’s Monetary Policy Committee meets next – the events below should have a major impact on the currency markets.

One of the preferred methods of taking advantage of market volatility is the trading of forex pairs using binary options. Be sure to take advantage of the current short-term volatility in the major pairs including the US dollar, the GBP and the Euro.

Potential Binary Option Setups

Here is a list of economic events that could provide the right conditions for a lucrative forex binary 0ption investment to finish in-the-money this week:

1. ECB President Jean-Claude Trichet’s Speech – Monday, August 29th 13:00 GMT – Following Bernanke’s highly anticipated speech during the Jackson Hole Meeting on Friday, the President of the European Central Bank, Jean-Claude Trichet, will speak to the Finance Committee of the European Parliament in Brussels during a special meeting on Monday.

If you believe that his speech is likely to affect the trading of the euro, one way to profit would be to invest in an EUR/USD binary option that expires 30 minutes to one hour after the speech.

If the general sentiment is that Trichet will reassure financial markets, it may be prudent to invest in a Call EUR/USD binary option with the idea that the euro will increase in value vis-a-vis the US dollar.

On the other hand, if there is grounds for doubt and pessimism, indicating a bearish outlook for the EU economy, it may be prudent to invest in a Put EUR/USD binary option with the expectation that the euro will lose ground against the greenback.

Note: Monday, August 29th, will be a Summer Bank Holiday in UK.

 

2. FOMC Meeting Minutes – Tuesday, August 30th 18:00 GMT – The Federal Open Market Committee (FOMC) Meeting Minutes are a detailed record of the committee’s interest rate meeting held about two weeks prior.

This week, the minutes are widely anticipated since it follows the Jackson Hole Meeting with the announcement of the decision not to launch any new round of Quantitative Easing (QE3) in the US. The minutes provide detailed insights regarding the FOMC’s contemporary stance on monetary policy, so analysts carefully comb them for clues regarding future interest rate shifts.

An opportunity to profit from an EUR/USD forex binary option may present itself depending on the minutes release’s effect on the markets.

If your expectation is that the USD may be negatively impacted by this release and lose ground against its EU counterpart you may want to invest in a Call on a EUR/USD binary option investment made at or around the release of the minutes.

If, on the contrary, you believe the US dollar will be buoyed by the minutes release and increase in value against the EU’s single currency, you may want to make an investment in a Put on an EUR/USD binary option at or around the release of the May FOMC Meeting Minutes.

 

3. ADP Nonfarm Employment Change – Wednesday, August 31th 12:15 GMT – The ADP National Employment Report is released by the Bureau of Labor Statistics and measures the monthly change of nonfarm private employment, based on a subset of aggregated and anonymous payroll data that represents approximately 400,000 US business clients.

The previous ADP report number was released on August 3rd and came out at 114K, which was quite positive since the previous forecast was for 100K. This month, the forecast is for 103K.

Should the reading be higher than expected, this could indicate that expectations for the USD are positive. In this case, an investment in a Put GBP/USD binary option at or around the release of the employment figures may finish in-the-money.

If, on the other hand, the ADP National Employment figures come out way below expectations, the USD may be negatively impacted by this data and lose ground against its UK counterpart. In that case, a Call on a GBP/USD binary option investment made at or around the release of the data may finish in-the-money.

 

4. German GDP (Quarterly) – Thursday, September 1st 6:00 A.M. GMT – The Gross Domestic Product (GDP) is the broadest measure of economic activity and is a key indicator for the economy’s health. It is provided by the Statistisches Bundesamt Deutschland. The quarterly percent changes in GDP shows the growth rate of the economy as a whole.  A higher than expected reading should be taken as positive for the German economy, while a lower than expected reading should be taken as negative for the country.

The previous German preliminary GDP released on August 16th came out with a percentage change of 0.1% which was a negative signal since analyst forecasted a change of 0.5%. The forecast for Thursday is 0.1%.

If the general sentiment is that the quarterly percent changes in German GDP will come out far below the prediction of 0.1%, it may be prudent to invest in a Put on an EUR/USD binary option with the idea that euro will decline in value vis-a-vis the dollar.

If, on the other hand, there is grounds for optimism and the feeling is that the German GDP reading will be much higher than 0.1%, indicating a positive outlook for the German economy, it may be prudent to invest in a Call on an EUR/USD binary option with the expectation that the euro will increase in value against the US currency.

 

5. US Unemployment Rate (Monthly) – Friday, September 2nd 12:30 GMT – The Unemployment Rate is a measure of the percentage of the total labor force that is unemployed but actively seeking employment and willing to work in the US. It is released by the Bureau of Labor Statistics.

A higher than anticipated  reading should be considered as negative/bearish for the USD, while a lower than forecasted  reading should be taken as positive/bullish for the US currency.

The previous figure released on August 5th was 9.1% which was positive since the previous forecast was for 9.2%. The forecast this month is 9.1% once again.

An opportunity to profit from a EUR/USD forex binary option may present itself if the US Unemployment Rate is much higher or lower than the predicted outcome.

Should the reading be higher than expected, this could indicate that expectations for the USD may be negatively impacted by this data and lose ground against its EU counterpart. In that case, a Call on a EUR/USD binary option investment made at or around the release of the data may finish in-the-money.

If, on the contrary, the release is more positive than forecasted, the US 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 on a EUR/USD binary option at or around the release of the employment figures may finish in-the-money.

 

For more binary options news and information, follow us on Twitter!

 

As always, keep in mind that the major forex pairs are constantly being influenced by many other factors beyond the release of economic data and that previous results do not guarantee future outcomes.

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