Federal Reserve Deflates Market Expectations
FOMC minutes indicated that the US Federal Reserve will likely end their bond buying program some time this year. Japan reopened after the New Year’s holiday and was the only market in Asia higher. The real reason for this is that Japan is just playing catch up to the other markets that have rallied this week after US lawmakers reached a deal on the fiscal cliff. Traders will now turn their attention to the release of the non-farm payrolls report in the US.
Change In Fed Policy Bullish For US Dollar
Today we are seeing across the board US dollar strength as the Fed changed its tone from December. In December many expected the Fed to continue their bond buying program into 2014 or 2015. However, the FOMC minutes indicated a different tone. If the Fed stops printing money, that will strengthen the US dollar and lead to lower commodity prices and weaker commodity currencies, such as the Australian dollar. A change in outlook can reverse the trends we have seen in the last few years. The previous policy lead to a much weaker US dollar and higher commodity prices.
Japanese Yen Continues To Get Hammered
With the US Federal Reserve looking to possibly put the brakes on their stimulus, Japan and its government are pledging to keep their foot on the gas and continue their stimulus. The Japanese Yen was last at 87.75 to the US dollar. This is the longest weekly losing streak for the Japanese Yen since 1989. Expectations are for continued Yen weakness and strength in Japanese equities. The Nikkei 225 was last up 2.7 percent.
Crude Oil And Metals Drop On FOMC Minutes
Crude oil and metals prices weakened after the FOMC minutes saw a stronger dollar. Most commodities are priced in dollars and a stronger dollar makes them less attractive on the global markets. Markets will be looking ahead to the US employment picture and the release of US crude inventories today.
In the commodity markets, crude oil was last trading at $92.24, down 68 cents, gold down $20.60 to $1654.00, silver down 89 cents to $29.83, copper at $3.6780 down 3.9 cents, platinum down $24.90 to $1555.00, and palladium at $688.50 down $8.65.
Australian Stocks Lower Today
Binary put options are in play today on Australian stocks. The ASX 200 was last down 19.2 points to 4721.50. Resource stocks were leading the way lower today. Rio Tinto was down 79 cents to $68.46, BHP Billiton down 27 cents to $37.88, and Fortescue Metals was 11.5 cents lower at $4.92 and is below the key $5 level.
Our advice for traders is to wait for the US to release the December employment report. There will be a lot of opportunities in the currencies and metals market. In the binary options gold market, traders might want to consider playing the Touch and Double Touch Options as the markets will be quite volatile. Traders can also look at playing the In and Out Binary Options as the market will likely breakout or breakdown.
As always be sure to watch the news and be sure to check back for the latest updates. For traders playing today’s employment report, good luck! For those that choose to stay on the sidelines, enjoy your weekend!
