Yen Caps Best Week in 16 Months
There was a lot of action in the forex market during the trading week that just passed. The dollar ended its seven-week gain amid the crash in oil prices. The commodity tumbled a whopping 4% on Friday alone, showing just how much action there is at the moment in the financial markets. It seems that traders decided to ditch the greenback in the latter part of the trading week due to lower inflation and global economic outlook expectations. This increased the bets that the Fed will think about when to raise interest rates. The dollar slid versus the yen by a whopping 2.2 percent to 118.75 yen, the biggest weekly decline since August 2013.
The good news for the European single currency was that it was able to rally versus the majority of its major currency counterparts. This is even though it lost some ground versus the Swiss franc. It seems that the euro was oversold in previous trading weeks, prompting traders to go long on the euro in the past several trading days. Traders are hoping that the euro will continue going higher in the week ahead, so open weekly Calls.
The Japanese eyen saw its best week in 16 months, as the slump in oil prices sparked demand for the Japanese yen. Moreover, the yen was very much oversold in previous trading weeks. In fact, traders were able to buy the Japanese currency on the cheap. Also, the yen was able to surge due to the higher demand for some haven currencies. The most notable weekly gains for the yen were capped versus the greenback. There were also important advances versus the Russian ruble.
We saw a lot of volatility when it came to global stocks. U.S. equities saw the worst week of losses since 2011. With oil price sliding into the abyss during the trading week, traders felt it was best for them to take out their profits and go short on American stocks. The Dow Jones binary option tumbled 1.8 percent. The S&P 500 Index fell 3.5 percent, its worst performance in over two years.
It is clear that the fall in oil prices is driving the way stocks are moving. The selloff picked up steam in the financial hours of trading on Friday, helping equities cap very big losses.
Financial traders will be cautious about making big investments in the coming days of trading.
Crude oil futures tumbled more than four percent at the end of the trading week, while the commodity also made very big losses earlier in the previous week of trading. This all came as the International Energy Agency cut its demand forecast for the fourth times in five months. Crude dipped by a massive 12 percent during the week that just passed, showing just what a lack of confidence traders have in the black gold now.
There was a fall in gold prices from the middle of the trading week, as the demand for gold slumped as a hedge against higher consumer costs. Note that crude oil tumbled, playing into the weaker gold prices. It is important to take into account that gold futures will take another hit once the coming week’s trading session commences, so get ready for this.
We have chosen crude oil as the commodity to ditch as soon as Monday’s trading session gets going. Weekly Call options are likely to bring high returns, as traders are of the view that selling is where the action is at.