Posted: 19 Sep 2010 11:00 PM PDT

Inflation figures from various countries, industrial output, job figures and other risk news forex events provide opportunities for binary options trading. Here are potential setups for forex this week.

Binary options can be used in forex trading as an alternative to the traditional stop loss order, as a tool for encountering false breakouts and more. News events also provide setups for binary options:

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The news events and the potential setups are based on information that is already available for the weekly outlooks, and the potential reactions to results which are significantly unexpected by the consensus. Some events collide with each other and could offset each other. So, these events aren’t in the list.

Quick explanation:

CALL options – if the price closes at a higher level than the price you purchased at expiry time, you make 75%. If it closes below, you’re left with 10%.
PUT options – if the price closes under the price you purchased at expiry time, you make 75%. If it closes above, you’re left with 10%.

Let’s review the events. All times are GMT.

British Mortgage Approvals: Monday, 8:30. Market expectations currently stand on 46K. 51K or higher – CALL option on GBP/USD. 38K or lower – PUT option on GBP/USD.
Swiss Trade Balance: Tuesday, 6:15. Market expects +1.97 billion. 3 billion or higher, PUT option on USD/CHF. 0.7 billion or lower, CALL option on USD/CHF.
European Industrial New Orders: Wednesday, 9:00. Market expects -1.2%. -2.6% or less – PUT option on EUR/USD. Positive result, CALL option on EUR/USD.
New Zealand GDP: Wednesday, 22:45. Market expects +0.5%. +1.0% or higher – CALL option on NZD/USD. 0.1% or lower, PUT option on NZD/USD.
US Unemployment Claims: Thursday, 12:30. Market expects 450K. 490K or higher, PUT option on USD/JPY. 430K or lower, CALL option on USD/JPY.
US Existing Home Sales: Thursday, 14:00. Market expects 4.11 million. 4.80 million or higher – CALL option on USD/JPY, 3.70 million or lower, PUT option on USD/JPY.
German Ifo Business Climate: Friday, 8:00. Market expects 106.3 points. 109 points or higher, CALL option on EUR/USD. 102 or lower, PUT option on EUR/USD.
US New Home Sales: Friday, 14:00. Market expects 293K. 350K or more, CALL option on USD/JPY. 240K or lower, PUT option on USD/JPY.

These expected market reactions and setups are general market commentary. This is by no means investment advice.

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Forex Daily Outlook – September 20 2010

Posted: 19 Sep 2010 03:00 PM PDT

We start the week with RBA Governor Glenn Stevens speech, Wholesale Sales in Canada, ECB President Trichet Speaks in Europe and more interesting news coming this week. Let’s see what awaits us today.

In Australia, Reserve Bank of Australia (RBA) Governor Glenn Stevens deliver a speech titled “Monetary Policy and the Regions” at the Foodbowl Unlimited Forum Luncheon, in Shepparton. And as of the central bank influence on the short term interest rates and subtle clues regarding future monetary policy.

In the US, NAHB Housing Market Index, Monthly Survey of about 900 home builders which asks respondents to rate the relative level of current and future single-family home sales increased by 1 point but still indicates a negative outlook on home sales.

In Canada, Foreign Securities Purchases a monthly data that Measures the total value of domestic stocks, bonds, and money-market assets purchased by foreigners during the reported month, increased by 2.72 B and directly linked to demand for domestic securities and currency demand.

More in Canada, Wholesale Sales, It’s a leading indicator of consumer spending – retailers generally order more goods from wholesalers when they expect consumer sales to increase, raised up by 0.9%.

For more on USD/CAD, read the Canadian dollar forecast.

In Europe, European Central Bank (ECB) President Jean-Claude Trichet speaks at the “Eurosystem Welcoming Estonia” event, in Tallinn. And as head of the ECB, influence the short term interest rates, euro’s value and used for subtle clues regarding future monetary policy.

Also in Europe, Italian Trade Balance, that measurers the difference in value between imported and exported goods during the reported month increased to -2.31 B, while a positive number indicates that more goods were exported than imported.

For more on the Euro, read the EUR/USD forecast and Casey Stubbs' latest analysis.

In Great Britain, Prelim Mortgage Approvals that measurers the new mortgages approved Number for home purchases during the previous month decreased by 1K. It’s a leading indicator of housing market demand – most home purchases are financed with a mortgage, so it provides an excellent gauge of how many qualified buyers are entering the market.

More in Great Britain, Rightmove House Price Index, the UK’s earliest report on housing inflation stabilized on 1.7%. It’s a monthly data that measures the asking price of homes for sale and it’s a leading indicator of the housing industry’s health.

but tends to produce a relatively mild impact because asking prices and selling prices are not always correlated that measurers the Change in the asking price of homes for sale;

Finally in Britain, Prelim M4 Money Supply, the total quantity of domestic currency in circulation and deposited in banks; decreased by 1% and It’s positively correlated with interest rates – early in the economic cycle an increasing supply of money leads to additional spending and investment, and later in the cycle expanding money supply leads to inflation.

Read more about the Pound in the GBP/USD forecast.

That’s it for today. Happy forex trading!

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GBP/USD Outlook – September 20-24

Posted: 19 Sep 2010 11:00 AM PDT

A variety of indicators is released in the UK this week, and will shape the direction of the Pound. Here’s an outlook for the British events, and an updated technical analysis for GBP/USD.

GBP/USD daily chart with support and resistance lines on it. Click to enlarge:

British figures in the past week weren’t too good – employment is still problematic. While the Pound gained the dollar, it was less than other currencies’ gains.

Rightmove HPI: Published Sunday, 23:00. This report isn’t considered the most accurate house price index. Nevertheless, it’s the earliest one and tends to move the Pound when there are no other indicators available. Prices of homes will probably see another drop – the third in a row. Last month saw a big drop – 1.7%.
Mortgage Approvals: Published Monday, 8:30. This is an official yet preliminary release of mortgage approvals, an important gauge for the housing sector and for the whole economy. Last month saw stability – a slide from 48K to 47K exactly as expected. No big change is likely now, perhaps a drop to 46K.
Public Sector Net Borrowing: Published Tuesday, 8:30. The new British government vowed to fight public debt with a series of budget cuts. Last month already saw some results, with public lending dropping from 13.9 to 3.2 billion. If borrowing is negative – meaning that a public surplus, the Pound will rock. Current expectations stand on a rising deficit – 12.3 billion.
MPC Meeting Minutes: Published Wednesday, 8:30. The last rate decision by the Monetary Policy Committee didn’t bring any news – the rate remained at 0.50%. But inflation refuses to fully return into the 1-3% target. It will be interesting to see if there’s still one member, Andrew Sentance, that wants a rate hike. If Sentance aligns with the others, the Pound will weaken. If he was joined by others, it will rise.
Inflation Report Hearings: Happens on Wednesday. Delayed from lat week, this event always brings action. Mervyn King, the head of the BoE, and usually more of his colleagues, testify in parliament about the inflation and also the state of the economy. The comments always create hours of action. King is usually pessimistic and brings the Pound down.
BBA Mortgage Approvals: Published Thursday. The British Bankers’ Association represents about two thirds of all British mortgages. While released after the official preliminary release of approvals, this indicator always rocks the markets. A stable figure is due now.

GBP/USD Technical Analysis

The Pound had a poor beginning to the weak, dropping to the 1.5350 support line (mentioned in last week’s outlook). It then moved up, struggling with 1.5480 and then with 1.5520 before rising up to the strong resistance line of 1.5720. It eventually closed lower, at 1.5631.

GBP/USD is now between the 1.5530 line, which capped the pair in April and in August, and 1.5650, which provided strong resistance in the past week.

Looking up, the 1.5720 line, which also had a role back in 2009, is now a strong resistance line.

Above, 15833 held the pair before it dropped at the beginning of the year and later worked as support. It also supported the pair in August. Even higher, August’s peak at 1.60 is the final resistance line for now.

Looking down, 1.5480 continues to provide minor support. It capped the pair on its way up in July and in August. Lower, the 1.5350, which capped the pair in March and supported it during September proved to be a very strong line once again.

Lower, 1.5230 resisted the Pound’s rise in July, and now works as support. It’s followed by 1.5220, which supported the pair in July as well.

I remain bearish on GBP/USD.

Britain’s fundamentals, and especially unemployment could provide downwards pressure on the Pound.

Further reading:

For a broad view of all the week’s major events worldwide, read the USD outlook.
For EUR/USD, check out the Euro/Dollar forecast.
For the Japanese yen, read the USD/JPY forecast.
For the Australian dollar (Aussie), check out the AUD/USD forecast.
For the New Zealand dollar (kiwi), read the NZD/USD forecast.
For USD/CAD (loonie), check out the Canadian dollar forecast.

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USD/CAD Outlook – September 20-24

Posted: 19 Sep 2010 06:00 AM PDT

Retail sales and inflation data are among the highlights of this week’s Canadian events. Here’s an outlook for the events that will shape the Canadian dollar’s trading, and an updated technical analysis for USD/CAD, now in lower ground.

USD/CAD daily chart with support and resistance lines on it. Click to enlarge

The US dollar retreated on the speculation that one more trillion dollars will be allocated for Quantitative Easing. The Canadian dollar enjoyed this, similar to other currencies. Will the pair advance to parity? Let’s start:

Foreign Securities Purchases: Monday, 12:30. The net value of purchases by foreigners serves as a gauge of confidence for the Canadian economy. Last month saw a plunge from 23 to 5.4 billion, worse than expected. This time, the value will probably be higher – 8.1 billion.
Wholesale Sales: Monday, 12:30. This indicator gives us a view at the back end of the economy – the wholesalers. Last month’s drop of 0.3% was far worse than a rise of 0.4% that was expected, and weighed very heavily on the loonie. A +0.6% correction is expected this time and should push currency higher.
CPI: Tuesday, 11:00. After three rate hikes, a significant rise in inflation is needed to bring about the next move. While consumer prices surprised with a 0.5% rise last month, Core CPI dropped, signalling that the rise was temporary. CPI will probably rise now by 0.2%, but Core CPI is expected to remain unchanged. Only a significant rise above 0.5% in both of them will trigger a jump in the loonie.
Retail Sales: Wednesday, 12:30. This important consumer indicator disappointed in the past three months and saw a squeeze. Also here, similar to wholesale sales, a correction is expected, +0.4%. Core retail sales, no less important, followed the same pattern of disappointing drops, and are also expected to recover now by 0.5%.
Leading Index: Wednesday, 12:30. 10 economic indicators are used to build this index, with most of them already being released. Nevertheless, it usually has a strong impact. Lat month’s 0.4% rise fell short of expectations. A faster growth rate is expected now, of 0.6%.

USD/CAD Technical Analysis

USD/CAD dropped below 1.0350 at the beginning of the week and descended through the 1.0280 line (appeared in last week’s outlook) to 1.02. It then bounced back up, and a second attempt to break below 1.02 also failed. It finally closed higher, at 1.0325.

The pair currently trades between 1.0280, which was a strong support line in July, and 1.0350, which capped its gains in the past week.

Higher, 1.05 held the pair twice during August and is the next line of resistance. Above, the stubborn 1.0680 worked as resistance in July and in August, for more than one day in each round.

Above, 1.0750 was a swing high during May and also the top border of a long-term range in 2009. The last line for now is 1.0850, which was also a swing high in May.

Looking down, 1.02, which was the 2009 low, strengthened in the past week, as it served as a double-bottom. Below, 1.01 cushioned a drop in August.

The ultimate line of support is at parity, that got closer in the past week. The lines below parity are 0.98 and 0.97.

I remain bearish on USD/CAD.

Canada’s healthy economy supports a stronger currency, despite the weakness of its main trade partner – the US.