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Italian Elections Rattle The Forex And Binary Options Market

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The forex and binary options markets got upended by the uncertainty in the Italian elections. Former Italian leader Silvio Berlusconi fared much better in the election than many had suspected and there is no clear winner in the Italian Senate. Italian leaders will now either have to compromise to convene a new government or hold new elections. The uncertainty has caused investors to sell risk-on assets in global markets and head into the safety of the US dollar, treasury bonds, German bunds and the Japanese yen.

Aussie Dollar Steady In The Forex And Binary Options Market

The Aussie dollar is holding the 1.0250 level in the forex and binary options market so far today in Asia trade. The AUD/USD pair is currently trading at 1.02671. The 1.02 to 1.025 is a critical support level in this pair.

Aussie Dollar Steady In The Forex And Binary Options Market

Forex and binary traders trading this pair today need to watch outside markets for an indication of direction. Further risk-off sentiment will further pressure this pair and test this critical support level.

Australian Stocks Drop In Binary Options Trading

Binary options on the ASX 200 index are trading lower today on the back of the global selloff. The ASX 200 is down 42.9 to 5012.90. All 4 major banks are down in binary options trading. Commonwealth Bank is down 18 cents to $65.57, Westpac lower by 8 cents to $30.29, ANZ down 7 cents to $28.40 and National Australia Bank dropping by 14.5 cents to $30.13.

Yen Strengthening Likely To Be Only Temporary

The yen strengthened yesterday against its major peers as traders covered their shorts and raised cash as other markets sold off. Yesterday was a classic unwinding of positions that traders have been locked into the past several months. I see the yen strengthening as a temporary phenomenon and traders will come back into their yen shorts once the Italian elections are sorted out.

Prime Minister Abe To Nominate Haruhiko Kuroda As Next Head Of BOJ

Haruhiko Kurudo is likely to be nominated by Prime Minister Shinzo Abe as the next Governor of the Bank of Japan. Kikuo Iwata and Hiroshi Nakaso are likely to be nominated for deputy roles and Japan’s opposition party has indicated that they will approve those nominations. All 3 potential appointees favor additional monetary easing this year and that will weaken the yen further.

The yen is weakening to start Asian trade this Tuesday. The AUD/JPY is at 94.566, the EUR/JPY at 120.165, GBP/JPY at 139.901, NZD/JPY at 76.768 and the USD/JPY at 92.072.

The Possible Return Of Silvio Berlusconi Shakes The Euro Zone

Global markets are not happy with the possible return of Silvio Berlusconi in Italy. It appears that Pier Luigi Bersani will win the lower chamber and that Berlusconi will have a blocking minority in the upper house. This is just enough to prevent Italy from having a government in place to continue enacting austerity measures that are necessary to insure stability in the euro zone. Berlusconi campaigned on rolling back all austerity measures. This is not what the markets want and look for continued euro currency weakness if the uncertainty in Italian politics continues. The EUR/USD is holding the 1.30 level for now at 1.30549.

The biggest move in the euro pairs that we’re seeing is in the EUR/CHF pair. Remember that the Swiss National Bank has a floor in the pair at the 1.20 level. The market has sold the euro and bought the Swiss franc in search of a safe haven. If the Italian election are sorted out, look for a return the 1.23 level rather quickly. If the election uncertainty continues, look for the 1.20 level to be tested.
The Possible Return Of Silvio Berlusconi Shakes The Euro Zone

Economic Data Calendar

  • 0600 Bank Of England Governor King Speaks (GBP)
  • 0815 Swiss Employment Level 4.11M forecast 4.12M prev (CHF)
  • 1100 British CBI Distributive Trades Survey 16 forecast 17 prev (GBP)
  • 1400 S&P Case Schiller Home Price Index (MoM) 0.6% forecast 0.6% prev (USD)
  • 1400 S&P Case Schiller Home Price Index (YoY) 6.6% forecast 5.5% prev (USD)
  • 1500 US Consumer Confidence 61.0 forecast 58.6 prev (USD)
  • 1500 US Richmond Fed Manufacturing Index -4 forecast -12 prev (USD)
  • 1500 Fed Chairman Bernanke Speaks
  • 2145 New Zealand Trade Balance 100M forecast 486M prev (USD)
  • 2350 Japan Retail Sales (YoY) -1.3% forecast 0.4% prev (USD)

Forex and binary options traders are getting 2 key speeches by Mervyn King and Ben Bernanke. Pay close attention to their words as their speeches will move the British Pound and the US dollar respectively. As always, good luck to all forex and binary traders today and be sure to check back for the latest updates!