Titan Trade Weekly Analysis 02/11/2014
U.S. Indexes Hit Record
We saw the pound sterling decline for a second trading week versus the greenback, and dropping for the fourth straight week. The slowing U.K. economic recovery led traders to the conclusion that the rate rise in the U.K. will end up being later than was originally thought. In fact, the sterling has seen the longest losing streak vs. the greenback since March 2010. We saw mortgage approvals in the U.K. slid for the third month in a row. In addition, house-price growth slowed in October. The pound sipped by about 0.6 percent versus the dollar last week. However, the sterling surged for the second straight trading week versus the euro.
The Bank of Japan has decided to go ahead with yet another round of stimulus, which will in effect end up really hurting the yen. The USD/JPY forex pair surged by a whopping 2.84 percent alone on Friday, showing how bearish traders are on the yen following the decision by the BOJ. The purpose of the stimulus is to trigger two percent inflation in two years. Leaders in Japan are still worried about deflation, so they are prematurely trying to produce inflation. It will be interesting to see how much lower the JPY will go against its peers this coming week.
There was a lot of weakness last week when it came to the Canadian dollar. This came about as the nation’s economy shrunk, showing that there is little reason to buy into the loonie as of now. In fact, the currency tumbled the most since 2011 showed the economy shrank for the first time in August this year. This increased the bets that the BOC will increase rates much later than the Fed. Therefore, look to di1tch the loonie in the coming trading week.
It was great to see that U.S. stocks surged during the week that just passed. This is largely led to the news that the Fed announced the end to QE, meaning that the economy is in very good condition. In reality, inflation figures for the previous quarter came out much better than was expected, which led to a run in the top U.S. stocks and indices.
Therefore, U.S. equities surged for both the week and the month, returning to record highs. The economic data and company earnings exceeded expectations, so it was no surprise that there was so much confidence among traders when speaking of risky assets.
We have seen the crude oil binary option cap is longest run of weekly losses since 2002. It has capped its sixth weekly losses in a row, as traders have opted for other assets. In addition, OPEC increased production to a 14-year high. It is forecasted that supply will continue to go higher, which will result in prices sliding further in the next week of trading.
The gold binary option tumbled with silver to the lowest level since 2010. There are a number of reasons for the slide during the previous trading week. The much stronger dollar has really hurt metals in recent trading days. In addition, investors have dropped haven metals in favor of risky equities. Much of the same is likely as the trading week takes off on Monday.
One of the most bearish commodities these days is the gold binary option. Investors have decided to go short due to the much stronger dollar and a lack of demand for haven metals. More weakness may be on the cards this coming week, so open weekly Put options on Monday morning.