The European Central Bank has decided to hold interest rates steady after their latest meeting. The ECB has been criticized for having “loose” policies, but they are actually doing quite well when it comes to maintaining growth within the euro zone. Another thing to come out of the latest ECB meeting was the fact that they are going to continue their euro buyback program until at least March. This program has also been criticized with their interest rate policy, but again, the euro zone is currently seeing very similar growth to the United States’ economy right now, indicating that it is working, at least for the time being.
The main impact of this decision is going to impact Forex traders. The euro gained quite a bit early in Thursday morning trading, up about 0.48 percent against the U.S. dollar. The euro also rose against the Japanese yen and the Swiss franc. The euro did drop against the British pound sterling, but the GBP is in a very unique situation because of the ongoing transition into an independent British economy. It is also worth noting that the euro gained the most against the yen, and its gains against the USD the franc were much less pronounced in nature. This hawkish nature has been successful so far, but until the ECB is able to back off a little bit, the euro will still be in a precarious long term situation.
A second impact could be seen early on Thursday morning in the United States stock market. After the move, or lack of one, was announced, U.S. stocks fell quite a bit early in the trading day. This was purely a reactionary move as nothing new had happened, but it created great opportunities for short term binary options traders, especially those that follow international news. While the connection is not an immediate one, it does make sense once you put thought into it. The move was designed to give the euro more strength and improve European markets. Thanks to this, more money is flowing out of the U.S. markets and into the euro zone. Again, this is purely a kneejerk reaction and not a lasting one. Still, being able to anticipate situations like this can lead to great binary options trades. And binary options have a huge strength here because they allow you to take on no ownership of any of the assets that you will be trading.
This is worth taking a deeper look at. When ownership is assumed of a stock, for example, you are entitled to many rights, but there is a high cost associated with this. When binary options are used, you are predicting just the movement of the price, and none of the responsibilities. If you are correct in your trades, then you can just pocket the earnings without any of the formalities. Also, to day trade a stock, you would need to have a margin account and be registered with the U.S. SEC as a pattern day trader. This means that you would need to have at least $25,000 in your margin account and have all of your paperwork filed long beforehand. This is not a problem for some traders, but for others it creates too many hoops to jump through, and if a surprise situation were to pop up, you would be unable to take advantage of it. Unless you had a binary options account, which can typically be set up in just a few minutes in most instances. So not only does it lower your costs and paperwork, it is much easier to get started for the average trader.