United Kingdom – Services Purchasing Managers’ Index
On Tuesday, January 6 at GMT 9:30 a.m., the Markit released the United Kingdom’s Services Purchasing Managers’ Index (PMI), which measures the level of a diffusion index based on a survey of purchasing managers from the service sector in the country.
Since businesses are the first to react to the changing market conditions, their purchasing managers usually have the latest insight about current and future view about their company’s view of the overall economy. Hence, binary options traders and other market participants consider the service PMI figure to be an important leading indicator of the UK’s economy.
Last month, in December, the UK’s services PMI came out at 58.6 and the forecast for the first month of 2015 was set at 58.9. The actual figure, however, came out just shy of the forecast, at 58.8.
New Zealand – GDT Price Index
Later, at GMT 2:49 p.m., the Global Dairy Trade released the GDT price index, which measures the changes in the average price of dairy products sold at auction in New Zealand.
Since the bulk of New Zealand’s exports to the world market consist of dairy products, the GDT price index acts as a leading indicator of the country’s trade balance because the rising price of dairy products ensures that foreign buyers have to purchase it at a higher price. Therefore, the binary options trader uses this data to predict future trade balance, which helps in the valuation of the New Zealand Dollar against other major currencies.
In December, the GDT price index increased by 2.4% and this month it has increased by another 3.6%, which confirms a positive trend in the overall dairy industry.
Trade Recommendation for the GBP/NZD
After forming a bullish pin bar on September 9, the GBP/NZD climbed to as high as 2.1050 on September 29. However, since then the pair has been ranging and formed an upward sloping trend line in the process.
Earlier this week, on January 6, the GBP/NZD broke below the upward trend line. Since the release of the New Zealand’s GDT price index on Tuesday, the GBP/NZD has fallen sharply towards the previous support level around 1.9365. Today, the price of GBP/NZD finally penetrated below this support level.
If the GBP/NZD daily candle price closes below 1.9365, it will confirm that the current bearish trend has more room to fall in the coming days. In that scenario, binary options traders may consider placing a PUT below today’s low with an exit target around 1.9050, which is the 161.8% Fibonacci extension level of the previous upward swing.[featured feattitle=’Recommended Broker: HighLow.net’ site=’HighLow’ ] HighLow.net is a popular binary options broker regulated by Australian Financial Services. [/featured]
About our Forex Analyst: Asif Imtiaz
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