The Dollar Hits a two Month High as Gold Tanks

The Dollar Hits a two Month High as Gold Tanks
by, Mike King, Bullish University

Overnight, the US Dollar index, which measures the US Dollar against six other global currencies hit its highest level in nearly two months. The index hit a high of 96.17 forcing binary options traders to adjust their Dollar bets.

The Dow Jones fell as much as 137 points during the day before pairing losses to close down around 85 points. Shares of 3M contributed to most of the losses. The S&P 500 was down around 0.6 percent with utilities shedding over two percent. The index hit a low below 2,150 at one point but recovered. Should we see a daily close below that key support then binary options traders could see a shift towards a major bearish momentum.

The tech heavy Nasdaq Composite was down 0.2 percent on the day. Tech stocks seesawed most of the day before closing lower.

US markets are stuck in a vacuum still and waiting on some solid news to break this monotonous range. We are in a trading range and traders should adjust their binary options strategy accordingly.

The International Monetary Fund (IMF) released its biannual World Economic Outlook (WEO) yesterday, which was largely unchanged but showed slowdowns in economic growth for advanced economies like the United States. Their economic growth is expected to slow to 1.6 percent from 2.1 percent last year. The forecast for July’s WEO was 1.8 percent expansion.

Gold futures sold off causing binary options strategy to shift rapidly. Gold fell off more than three percent to settle at $1,269.70 per ounce. Its worst trading day since 2013. The selloff in gold was due to renewed chatter from Federal Reserve Board officials showing hawkish opinions towards raising rates by December of this year. We could also see a rate hike in the election month of November. However, it is not very likely for the Fed to take a risk of rising rates during the month the United States choses its next president.

Investors were also watching embattled German bank Deutsche’s shares as the world saw a roller coaster ride thanks to worries it would be unable to pay its massive fine imposed by the US regulatory authorities. However, news surfaced that the bank could reduce its fine from $14 billion to around $5 billion. Investors have lost confidence in Deutsche Bank and this should be at the front of binary options trading strategy going forward.

In Federal Reserve Bank news, Richmond Fed President Jeffrey Lacker said there was a strong case to raise interest rates significantly as well as keeping inflation under control. He said that “Pre-emptive increases in the federal funds rate are likely to play a critical role in maintaining the stability of inflation.” Lacker is a non-voting member of the Fed’s policymaking committee (Federal Open Markets Committee or FOMC).

US Treasury yields rose after his talk as the two year note hit a yield of 0.82 percent and the benchmark 10 year yield rose to 1.68 percent.

Later in the evening, Fed President Charles Evans spoke. He is head of the Chicago Fed and he said he was okay with an imminent rate increase as long as economic data continued to warrant such a move.

Binary options traders should note that continued speeches from Federal Reserve members will continue to be noise in the background having an impact on the US Dollar and its Forex trading crosses. This week is a data heavy week with the ever watched non-farm payroll report due at the end of the week.

 

from Bullish University http://ift.tt/2dDRiX1