BINARYA OPTIONS MARKET REVIEW

22 February 2012 – 10:04 G.M.T.

 By TradeRush.com Market Analysis Team

DOW ROLLERCOASTER COULD NOT SUSTAIN 13,OOO BREAKTHROUGH

The Dow Jones industrial average yesterday hit a high of 13,005 – the first time it crossed the psychological barrier of 13,000 since May 2008 – and fell as low as 12,926 before closing out the day at 12,965.69. The euphoric moment came early in the trading day and was the result of early optimism regarding the Greek bailout deal. However, reality settled in and traders remembered that the cost of a barrel of oil was creeping up. Prices at the gas pumps were heading up. Iran also continued with its sabre rattling. In addition, a bit more attention was given to a Congressional Budget Office study on persistent unemployment that was released on 16 Feb. and escaped early notice. CBO projected that unemployment would remain above 8% until 2014. The official unemployment rate excludes both those who want to work but have not been on a job hunt in the past four weeks and part-time workers who want full-time employment, CBO noted. If those people were added to the jobless tally, the unemployment rate in January would have been in the neighborhood of 15%, CBO said.

E.C.B. CHEAP BANK LOANS OBVIATE NEED TO BUY GOVERNMENT BONDS

The past two weeks have seen the European Central Bank wind down its program of buying government bonds in the secondary market in order to lend a helping hand to debt-laden euro zone countries. Two weeks ago, the E.C.B. bought €59 million in such bonds and last week the amount was zero. Analysts attribute this to the short-term success of the program the E.C.B. recently launched to offer banks inexpensive, long-term loans. This infusion of capital would then be used to build a market for government bonds that pay a higher yield than the banks pay for interest on their loans from the E.C.B.  The first tranche of capital totaled €489 billion and 523 banks fed at the trough. The central bank expects to offer a second tranche on 29 Feb.

GREENBACK SHOWING GAINS WHILE EUROPEAN MARKETS HEAD DOWN

At press time, the U.S. dollar was making a variety of gains in major pairings – the EUR/USD was -0.02%, the GBP/USD was -0.47%, the USD/JPY was +0.55%, the USD/CHF was +0.01%, the USD/CAD was +0.06% and the AUD/USD was -0.13%. The major European stock markets were all down – the FTSE 100 was -0.33%, the DAX was -0.83%, the CAC 40 was -0.38%, Madrid was -0.80% and the AEX Amsterdam was -0.63%. In Asia, the major markets were up – the Nikkei was +0.96%, the Hang Seng was +0.33% and Shanghai was +0.93%. In commodities, oil was $105.83 a barrel (or -0.40%) and gold was $1,755.30 (or -0.18%). Yesterday, the major U.S. markets closed mixed – the Dow finished at +0.12%, the S&P 500 ended +0.07% and Nasdaq closed at -0.11%.  

TODAY’S KEY ECONOMIC INDICATORS

Argentina – Unemployment data

Belgium – Belgium National Bank releases business sentiment index

Euro Zone – Flash Composite Purchasing Managers Index (PMI), Flash Manufacturing PMI, Flash Services PMI, and data on new industrial orders

France – Consumer price index (CPI)

Italy - CPI

Norway – Unemployment data

Russia – CPI

Sweden – SCB unemployment data

U.S. – Existing home sales data