Current downward dynamics of the US dollar fades. The catalyst for the resumption of the US currency growth will become either positive economic data confirming the need to tighten monetary policy this year or the desire of other central banks to stop the strengthening of their currencies. In the short term, this theme can influence the dynamics of the rate, but in the long-term horizon will depend on the outlook for US economic growth compared with other countries.
We bought only two binary options on currency pairs with the US dollar last week. Put binary options on EURUSD and GBPUSD showed our positive outlook for the US dollar against European currencies. Even though the Fed’s controversial comments, US dollar still has potential for growth.
Yen Moves Higher and Higher
USDJPY on Thursday reached multi-year lows. In this regard, the pair retained the potential for further decline, but only in the case of alleged reduction of interest in risky assets. Recently, the Bank of Japan head often tries to verbally weaken the yen if it starts to rise too frisky. However, the effect of such interventions is small. In general, undervaluation of the yen and the repatriation of funds by pension funds for disbursement aging people will also support the growth of the exchange rate.
We stuck to a neutral view on the Japanese yen. We bought 2 Call and Put binary options on currency pairs with the yen. Japanese central bank’s decision helped the yen to rise. In this case, we were buying binary options on the drop of the yen from important price levels in order to catch the rebound.
Use GBP Growth for Puts Buying
GBPUSD approached a mark of 1.4500, positioning is the reason for that, but not change the fundamental outlook for the United Kingdom. Pound is still extremely sensitive to risk. Thus, if in the coming days, risk appetite starts to fall, GBPUSD will rush down. The Bank of England took a neutral position regarding interest rates, no one member of the Monetary Policy Committee has made a proposal to reduce them. Brexit threat will continue to put pressure on the pound. Retail sales report will be in the focus of investors.
Put binary option on GBPUSD currency pair was the only transactions made by us on the currency pairs with the pound sterling. The pound rose significantly so you can consider buying a Put option on it, given the growing number of supporters of the UK exit from the European Union, which could lead to a positive vote in the referendum on June 23.
Anti-risk sentiment will limit the downward trend of the franc. The Swiss National Bank took a wait and see attitude, which also indirectly supports the currency, depriving it of the direct reasons for the decline. Once the US dollar will resume its growth, it is possible again to buy Call binary options on USDCHF, though it is not expected in the next few days. SNB lowered its inflation forecast, but sees no need for further rate cuts.
We did not buy binary options on the currency pairs with the Swiss franc. The publication of important news from Switzerland was not planned, so the dynamics of the franc practically repeated euro behavior. However, soon the situation could change and possible easing by the ECB can lead to an increase in the Swiss franc as the weakening euro alternative.
Canadian Dollar Still Depends on Oil
Oil prices remain the main catalyst for USDCAD, but the pair is unlikely to repeat the sharp drop observed in December-January as the Bank of Canada will not cut rates in response to the dynamics of oil prices. Surprisingly positive data on sales in the manufacturing sector indicate the stability of the economy.
The Canadian dollar also does not deserve our attention. The price of oil for a week is about $40 per barrel, so we were not able to lay down a clear outlook for the Canadian dollar, significantly dependent on world oil prices.
Australian Dollar Drops Against the Backdrop of Central Banks Policy
Upward pricing of iron ore and an unexpected strengthening of the labor market provided support to the Australian dollar. Now the Reserve Bank of Australia will have to decide whether the current exchange rate of Australian currency harms export sector. RBA is one of the central banks, which has room for maneuver, it can lower the rate, if it considers that there is a need.
The Australian dollar was the most popular currency traded by us. We bought 6 binary options on the Australian currency from 9. We stuck mostly positive outlook for the AUD (4 Call binary options against 2 Puts), taking into account the substantial increase in iron ore prices.
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