Weekly Binary Options Trading Briefing 10-17/12/2012 – Euro Lower on Potential Rate Cuts, Lower Growth Forecasts in Germany

Binary Options Trading Recommendations for the upcoming week –  Market Information and Trading Tips

Most of last week’s price activity was seen in the closing sessions, as the wider market made the choice to wait for critical economic releases before committing to large positions.  This is often the case when the US Non Farm Payrolls report in scheduled and the end result was a stronger US Dollar, as a confluence of events joined to work against the Euro. 

Looking at the data, this week’s report showed that the US economy added 146,000 new jobs for the month of November and the Unemployment Rate (released at the same time) showed a decline from 7.9% to 7.7%, and this is the lowest number we have seen since the early months of the Obama administration.  The headline jobs number was more than 80% higher than the consensus estimates, and traders focused on these factors more than the accompanying downward revision to the strong labor market data that was seen in October. 

Draghi Sends Euro Lower on Rate Cut Comments

As a general rule, data like this tends to be supportive for high-yielding/risk currencies and commodities but Euro-negative stories seen previously pushed investors to look for safe haven alternatives.  Specifically, this week’s report from the Bundesbank (forecasting 1% lower growth in Germany for 2013), and comments from ECB President Draghi suggesting that we could see further reductions in interest rates early next year were enough for markets to start selling again after the rally above 1.31 against the Dollar. 

Since commodities like Gold and Oil are priced in Dollars, these anti-Euro flows coincided with the stronger employment figures to make the big Dollar the choice trade for the week.  Looking ahead, the fate of the Euro remains highly questionable as there is not much room for the ECB to make further reductions to base lending rates (currently at 0.75%), but ECB sources are starting to say that a majority of the body’s policymakers are in favor of cheaper borrowing costs, and this is not a bullish scenario for the currency. 

Ahead next week, economic data is unlikely to be market moving, as we only have inflation data (in the US, Eurozone and Germany).   Watch for any news on the Fiscal Cliff situation and expect trading volatility to start to slow into the Christmas holiday. 

My Trading Recommendations in 50 words

1. Stronger employment data in the US could combine with positive trends in holiday spending to support prices in the S&P 500 through next week (and the end of the month).  I will be looking to enter into weekly CALLS on a drift back into 1405 for the index, targeting a rise of at least $20.

2. Last week’s Dollar strength disproportionately affected Gold prices and if we can get some more momentum selling into $1680, I will enter into weekly CALLS, as we could easily see a rally back above $1740 before then end of the year.

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