The consequences of comments from Draghi lies in the fact that the euro is once again enter the six-week period of uncertainty and prediction of the ECB actions on the March meeting. There will be new economic forecasts and the ECB will decide how it will meet its projected solutions. President of the ECB is responsible for the disappointment in December, when the ECB did not act as markets expected. Thus, it is likely that the Governing Council will be more cautious this time in the comments in the coming weeks.
The single currency launched a substantial portion of the initial decline recorded after the accompanying statement release. There are two reasons. Firstly, the reluctance to open new short positions on the euro under the pretext of new future mitigation measures once already burned. Second, it is the fact that the global background and the fundamental dynamics of the euro continue to grant asylum to some extent on the overall monetary dynamics.
The single European currency has participated 5 times in the binary options trading last week. Especially we want to note EURGBP currency pair, we bought 3 binary options on it. In general, we have adhered to a neutral positive outlook on the euro, which led to the purchase of 3 Call options and 2 Put binary options.
USDJPY Is Under Volatility Storm
In the context of the global environment, we are seeing a lot of the Asian indices in the green zone, but even 6% Nikkei growth suggest that the index reached the level of the opening two days ago, that was the volatility of recent sessions. In addition to the more positive overall tone, we saw oil prices above $30 per barrel in the last few days, these were the first signs of corrective activity from the beginning of the year for oil prices.
It is not surprising to see a correction of the weakest currencies since the beginning of this year, mainly in the dollar block, the yen was the weakest, USDJPY pair to back above 118.00, the fundamental volatility means that during this week we had 2% range of pair’s dynamics.
We bought only 3 binary options on currency pairs with Japanese yen of 11 last week. 2 of them were bought in favor of the Japanese currency and 1 – against. And in the case we do not decide to make trading decisions on Friday, the yen would not have to participate in trading last week.
Waiting for 1.5000 in USDCAD
This Monday became the first in 2016, when we saw the growth of the Asian indices; it should shake European markets also, tends to increase with the end of last week. Demand for risk was evident in commodity markets and the price of crude oil has passed the biggest two-day rally in seven years, as Brent get back above $30 per barrel.
On Wednesday last week, the Bank of Canada kept interest rates unchanged, disappointing traders expected the central bank to decrease the rates. Despite the fact that the accompanying results of the Bank of Canada’s guide contains the revision of economic forecasts downwards, implemented in recent times the weakness of the Canadian dollar and expectations of budgetary expenditures allowed the central bank to refrain from interest rates cutting. Inaction of the Bank of Canada led to the correctional strengthening of the Canadian dollar.
The Canadian currency did not participate in our trading last week, which was the right decision. Traders understand that the price of oil has fallen very sharply and join binary options trading on currency pairs with the Canadian dollar would be dangerous, given that the oil price was close to the formation of a local minimum.
Rising oil will restore some currencies, particularly GBPUSD pair, which briefly tested the levels above 1.4300 in the night, and if we see the continued growth in raw materials, a further decline in the US dollar could allow the cable to reach 1.4500.
Referendum Expectations Included in GBP Rate
GBPUSD attempts to increase remain restrained and consolidation in the last couple of days is more like a pause in the downward movement rather than a reversal higher. However, the potential for further fall looks limited: the theme of the referendum in the United Kingdom is not new and already taken into account in the rate of the pound and it also led to an adjustment of expectations of a rate hike by the Bank of England. We do not think that we can expect tangible improvements in the GBP dynamics in the near future, as uncertainty remains and the financial markets have been turbulent.
Sterling took part in the three opened positions. Without exception, all positions were open on EURGBP currency pair and we stuck mostly bearish about the prospects for this currency pair.
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