The risk on trade has again generated support for global growth instruments such as copper, as investors look to the red metal for positive momentum. Copper swung up and down for weeks on Greek-related news, amid worries of risk to European banks and contagion in other heavily indebted euro-zone countries. The passage of austerity measures Wednesday moves the heavily indebted country a step closer to containing its debt crisis. Continue reading
The currency markets remain on edged and this situation is reflected in the strength of the Swiss Franc. A warning shot from Moody’s that Japan’s failure to meet a July 20th deadline for a long-term fiscal plan is a negative development, fueling speculation of a looming downgrade. Japan’s Prime Minister Kan has called for an unscheduled press conference around 9:00 am EST and there is some speculation he will announce his resignation. While Kan is under pressure to resign, he is expected to do so only after the second reconstruction budget is approved. At the unscheduled press conference, a Reconstruction Minister may be named.
While recognizing that pressure on Spanish and Italian bonds and CDS emerged in recent sessions, the focus is squarely on Greece this week. While the debate in parliament begins, the Greek protests to additional austerity appear to have escalated. The vote on the austerity package is currently slated for Wed and an implementation vote on Thurs. The EU and IMF have indicated that national unity was essentially, but now they would seem to be content with a simple majority vote. That simple majority itself may be a cliff-hanger and reports suggest that at least four Socialist MPs may not support it.
The Swiss Franc is sitting on support levels and poised to break to the downside is risk re-immerge that the vote on austerity is likely to fail. Wait for a solid break through support to speculate on further downside.
The Trade – Buy a Binary Option Daily Put on a daily close below .8315.
Asset : USD / CHF
The trade : Binary Put Option
Expiry time : End of day
When : On a daily close below .8315
The Pound dropped to support levels as U.K. monetary policy makers, led by Governor Mervyn King, held rates at a record low 0.5 percent on June 9 to support the economy, even as inflation held at the fastest pace since October 2008 last month. Minutes of the meeting showed that Chief Economist Spencer Dale and Martin Weale continued a push for a quarter-point increase in the benchmark rate. Continue reading
Global markets are likely to be driven again this week by events surrounding Greece. While continued uncertainty over Greece is likely to weigh on sentiment and in turn spur broad dollar strength, there were some crucial steps taken last week that are likely to pave the way for some positive developments this week. Germany, softened its stance regarding private sector participation in a second Greek aid package. Likewise, the IMF appears to have softened its stance as well, which means that Greece will likely receive the next tranche of funding.
Beyond Greece the two key events in the G10 for the upcoming week are the FOMC meeting and the subsequent press conference. We expect the Fed to remain on hold and but more importantly to signal “exceptional low levels for the federal funds rate for an extended period”, with limited changes from the previous statement. Overall, the statement and press conference are also likely to be interesting given the Fed’s current challenges due to the recent deterioration in the macro data. In any event, the chairman will likely acknowledge the recent deterioration in the US data but again to suggest that the recent soft data is temporary in nature and is likely to reverse course later on in H2. The press conference is also likely to be watched to for comments in regards to QE3.
Later in the week the US will release a number of relevant home sales data points which could help turn the markets higher. A technical break above 1296, will likely draw investors back into the market for a test of resistance near 1322.
The trade, buy a binary option call on a close above 1296.
Asset : S$P
The trade : Binary Call Option
Expiry time : End of Day
When : On a daily close above 1296.
The result : Triggered 06/28/11 – In the money 06/29/11
The commodity currencies are beginning to percolate and the Australian dollar is threatening to break out to the upside. Robust signs from China, Australia’s biggest export market, buoyed the AUD/USD, despite business conditions within Australian that are continuing to moderate. Continue reading
Fear within the marketplace continued to edge higher last week, as investors dumped stocks and commodities and exited positions in riskier assets. The dollar continued to move higher and the volatility index “the VIX” continued to benefit.
The decline of the S&P 500 Index for 6 straight weeks has edged the VIX volatility index to the highest levels since the spike seen in March during and post the Japanese natural and nuclear disasters. The 200-day moving average to the benchmark volatility index has been solid resistance, and traders have made 2 attempts to break above this average near 20, but the market failed to close near this level. Continue reading
In a decision that shocked oil markets and sent oil prices higher, OPEC officials said the group had failed to reach consensus to boost output as expected. Iranian Oil Minister Mohammad Aliabadi, who is also serving as president of the producer’s organization, said the decision was “unwelcome” by some members. Continue reading
Goldman Sachs Group Inc., is trying to counter a Senate subcommittee report that is fueling investigations and suspicion of the firm. Regulators’ plan to accuse the subcommittee of drastically overstating Goldman’s bets against the housing market in 2007.
The securities firm is considering releasing documents about its mortgage bets that are aimed at showing what Goldman officials claim is sloppy math and incomplete analysis by the Senate Permanent Subcommittee on Investigations as the panel sifted through tens of millions of documents turned over by Goldman.
Goldman initially said it disagreed “with many of the conclusions of the report,” though the company added that it takes “seriously the issues explored by the subcommittee.”
Executives at Goldman haven’t denied to lawmakers or in other public comments that the firm’s overall bias was to be negative on the subprime-mortgage market, meaning the company would benefit as housing prices fell and borrowers stopped making payments on their loans.
Manhattan District Attorney Cyrus Vance Jr. subpoenaed Goldman last week for information about CDO deals outlined in the report. Goldman executives are expecting to get subpoenas from the Justice Department. The subcommittee’s chairman, Sen. Carl Levin (D., Mich.), referred the report to Justice officials, prodding them to launch a criminal investigation of Goldman. New York State Attorney General Eric Schneiderman has launched a probe of Goldman and other firms over their bundling of mortgage loans into securities.
Goldman Sachs has been on the defensive despite relatively strong first quarter numbers. The company continue to be caught in fraud accusations even after the firm settled charges with the SEC not admitting or denying any wrong doing. If prices close below the current support levels near 129, there could be substantial downside.
The trade, buy a daily binary option put on Goldman Sachs on a close below 128, with a floor at 125.
Asset : Goldman Sachs
The trade : Binary Put Option
Expiry time : End of day
When : On a daily close lower then 128 but not lower then 125
Which is going higher Fedex or UPS – Pair Options Conquer Trading Ranges
The transportation sector has chopped in a range for the majority of 2011 making it difficult for traders to generate profits from this sector. An option on the spread, otherwise known as pair options, would allow an investor to take advantage of the range bound Fedex / UPS pair. Continue reading
The franc, like the yen, has been a safe haven currency and seems to strengthen during bouts of political and economic tension. Additionally the health of the Swiss economy, is persuading investors to buy the franc, rather than the yen, as there should be an eventual carry given the potential for increasing interest rates in Switzerland.
The strong franc hasn’t slowed the Swiss economy. It grew at an annual rate of 2.4% in the first quarter, showing that while the strong franc may have cut into exporters’ profit margins, the economy has been more resilient than some, including the Swiss National Bank, expected. Continue reading