Yesterday GBPUSD passed 100 points down to the secondary option barrier located at 1.5999. Despite the absence of major economic reports the level of volatility was medium mainly due to the warnings made by some rating agencies about the possibility of Greek default. To their minds, it’s all about the so-called “rollover” operation, i.e. reinvesting the money obtained from redeeming bonds back in the same bonds, which, they say, cannot reduce the threat of default.
Portugal added some fuel to the fire: Moody's cut the country’s credit rating down to Ba2 saying that Portugal well may ask for another loan. Portugal is the 3rd EU country after Greece and Ireland that asked for financial aid. The situation around Greece and Portugal was predictable but still made traders and investors nervous, reminding that the eurozone’s debt crisis was not over. Only Germany brought some positive sentiment to the market. Its manufacturing orders grew by 1.8% versus the previous value and the forecast.
Today’s news background is going to be fairly rich in significant reports: the USA’s news block on unemployment, the ECB and BoE’s interest rates decisions, the UK’s industrial production and Jean-Claude Trichet’s speech.
It is recommended to buy volatility in the morning before the mentioned news releases. 1.6232 and 1.5911 remain to be the closest and strongest levels of support and resistance.
Provided by the Department of Options,
