Weekly Binary Options Trading Briefing 19-26/11/2012 – US Dollar Gains as Investors Move Out of Stock Markets
Binary Options Trading Recommendations for the upcoming week – Market Information and Trading Tips
The US Dollar was one of the main beneficiaries last week as investors assessed a confluence of global risks and made the decision to close out on positions in equity markets before the level of uncertainty gets any worse. The Dollar tied its best weekly performance since the middle of the Summer as the S&P 500 ended roughly 2% lower and investors looked for safe haven assets in order to protect their money from the overall bearish sentiment seen in the markets.
To start the week, momentum was headed in a negative direction but with the seemingly constant focus on the Fiscal Cliff negotiations in the US, renewed political conflicts between Israel and Hamas, evidence of a second recession in the Eurozone and some of the poorest rates of growth in China in the last four years, it is not much of a surprise to see a negative close for stocks into the end of the week.
Potential Influence of External Events on the Dollar
While most of these negative stories are clear positives for the US Dollar, we did hear some hints early in the week that the US Federal Reserve will signal plans to enact additional measures to ease monetary policy in the US but even this market chatter was not enough to disway markets from using the greenback as its safe haven of choice.
Looking ahead, we will have thinner market volumes during the holiday themed week ahead, which means that markets are less likely to pay attention to Monday’s housing data or the consumer sentiment and Leading Indicators reports that will be released on Wednesday.
Since we are likely to have a mostly uneventful week in the coming sessions, traders should be preparing themselves on a more long term basis. The over-riding factors likely to influence markets in the medium term will be the general expectations for retail sales this holiday seasons (as well as the revisions to those expectations) and any evidence of progress between the Republicans and Democrats in agreeing on a workable budget for 2013.
My Trading Recommendations in 50 Words
1. The worst case estimates for a negative conclusion in the Fiscal Cliff talks call for as much as a 4% decline in US economic growth so while those estimates seem excessive, expect the continued focus on this topic to support the US Dollar. I will be looking to take Weekly PUT options in the AUD/USD at current levels, looking for a drop to at least 1.0250.
2. Bearish sentiment in stocks continues, and the FTSE is trading at some suitably bearish levels for PUT options (below 5640). I will take Weekly PUTS here, in what could be a massive drop into the mid 5400s before we see any significant corrections. Rallies above 5730 negates the bias.
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