Dollar reacted to the statement by Janet Yellen
Yesterday in the House of Representatives of the US Congress, Fed Chairman Janet Yellen announced its intention to start reducing the 4.456-trillion balance sheets. This is a direct indication of the fact that QE will be no more.
It seems that the confrontation between the Fed and the White House intensifies
A couple of months ago, the Fed considered the continuation of QE. Such a reversal of the strategy is the proof version of the confrontation between the Fed and the new White House administration. Donald Trump had planned to spend $1 trillion on infrastructure investment. It seems the Fed explicitly refused to participate in it.
Yesterday the economic indicators were positive. The retail sales rose by 0.4% against the forecast of 0.1%. The core retails sales rose by 0.8% - the largest increase since May 2015. In January, the CPI increased by 0.6% against the expectations of 0.3%. The core CPI gained 0.3% against the expectations of 0.2%. The industrial production fell by 0.3% vs. the forecast of +0.1%, which reduced the rate from 0.7% to 0.0% on an annualized basis.
Today, the US is to publish data on the building permits. In January, this figure is expected to be 1.23 million against 1.21 million in December. The number of housing starts is forecasted unchanged, 1.23 million. The Philadelphia Fed manufacturing index is expected at 18.5 against 23.6 in December, but due to good growth in the New York region, the index may exceed the expectations. The probability of the March rate hike rose from 34% to 46%.
How we trade binary
It is worth to buy Call options only after the real fixing of the pair GBP/USD above 1.2480. At this level, we can expect a strong growth with a return to 1.2532. I advise you not to rush with buying Put options today. The optimal level to buy Put option will be the level of 1.2532.
We would buy Call options if the pair rises above 1.2480. This scenario would be invalidated if the pair goes below 1.2413, in which case we would go for PUT option with the end of the expiry.
Target price: 1.2480
Expiry time: 21:00 GMT