President Donald J. Trump has been in office since January 20, 2017, and already the media is out for blood. Left-wing media networks in CNN and NBC are seeking the proverbial smoking gun after Trump’s national security advisor Gen. Flynn was relieved of his position. Whether the media will be able to link Trump to the controversy remains to be seen. Politics aside, Trump’s brief tenure in the Oval Office has dovetailed with unprecedented economic gains on Wall Street. The Dow Jones Industrial Average is up 4.02% over the past 1 month, and trading at 20,624.05. The S&P 500 index is up 3.52% over the same period, and is now trading at 2,351.16. The all-important tech index – the Nasdaq Composite Index is up 5.10% over the past 1 month and is trading at 5,838.58.

In all instances, the 1-year performance of major US indices has shown an appreciation of over 20%, averaging around 26%. This is phenomenal, given the current state of global economic affairs, what with geopolitical uncertainty in the Middle East, upcoming elections across Europe and the Brexit referendum. We have seen treasuries extending their performance, even after the GBP faltered on Friday. Part of the reason for the strong rally on the S&P 500 index was the performance of Kraft Heinz – the food manufacturer which rose by 10%. It is against this backdrop that the week’s top 4 financial assets are discussed.

Trading Opportunity #1 – USD/JPY pair weakens

The USD/JPY pair is currently trading at 112.8360, down 0.3779% or 0.4280 JPY. The greenback briefly broke higher against the JPY, rising towards the 115 level during the week, but subsequently retreated to end markedly lower against the yen. The all-important US dollar index – a broad measure of the strength of the greenback – traded at 100.90, after closing at 100.50 on Thursday, 16 February 2017. Of course, short-term weakness in the USD/JPY pair should not blur the picture for the long-term trend. The Fed is slated to increase interest rates at least 3 times in 2017, and this will inevitably reverse the short-term weakness we are seeing in the pair. The US economy is approaching the full employment level, and the Fed is preparing consumers for higher borrowing costs.

We have already seen an uptick in the US consumer price index, and this is indicative of rising inflation, and the concomitant movement towards higher interest rates. This coming week, Wall Street will be closed for business on Presidents’ Day, but traders will want to look out for the sentiments expressed by various Fed governors including Jerome Powell, Patrick Harker, and Neel Kashkari. If they strike a similar tone to Fed Chair, Janet Yellen, we could see the USD/JPY doing an about turn in coming days. Meanwhile, the USD/JPY is also moving in a similar direction to the Nikkei 225 index. Recall that the BOJ has been embarking upon a QQE program (quantitative and qualitative easing) as the Bank of Japan seeks to accelerate the velocity flow of money through the economy to kickstart Japanese enterprise. Like the Fed, the Bank of Japan is also targeting a 2% inflation figure, but Japan is struggling to hit its mark.

Trading Opportunity #2 – FTSE 100 Index Spikes after GBP Weakness

The FTSE 100 index managed to turn things around slightly on Friday, 17 February, after the GBP/USD pair weakened. Recall that the FTSE 100 index tends to move in the opposite direction to GBP strength or weakness. This is because over 70% of earnings are generated outside of the UK and when the GBP is weak, those earnings are worth more in the UK. By the same token when the GBP strengthens, foreign earnings are worth less in GBP. At last count, the FTSE 100 index was trading at 7,299.96, up 0.3% or 22.04 points. There were several other reasons why the FTSE 100 index ended higher, including strong gains made by Unilever.

As one of the core components of the FTSE 100 index, Unilever rose 13.43%, propelled in large part by the movement of Kraft Heinz company which gained 10.74% on the US exchanges. The two are linked by merger proposals. Generally, traders have been bearish on the GBP, going long on the USD/GBP pair for several weeks. As a binary options trader, keep your eyes on the GBP. Any signs of a reversal will naturally affect the FTSE 100 index. For now, the bulls appear to be charging and this is being shored up by GBP weakness.

Trading Opportunity #3 – Oil Prices on the Rise

On Friday, 17 February 2017, Brent crude oil – the international benchmark closed at $55.81 per barrel. Crude oil ended slightly firmer for the week, rising 0.3%. WTI crude oil – West Texas intermediate – also rose and closed at $55.38 per barrel. While the gains in crude oil have been rather muted, they are sufficient for binary options traders who simply need an indication of trade direction, not a sizable price movement. We are seeing a move towards call options on crude oil. In fact, one of the foremost experts in commodities trading, Dennis Gartman alluded to 1 billion barrels of crude oil in a long position, while just 100 million barrels were in a short position. This ratio is the clearest possible evidence that the smart money is on rising oil prices.

Every week of 2017, crude oil inventory levels have been rising, and they are just fractionally behind the 80-year high that was recorded in 2016. Some 260 million barrels of gasoline inventories are also available and rising fast. At last count, there are now almost 600 oil rigs in operation in the US and production is a smidge under 9 billion barrels per month. The trend is once again bullish. Outside of the US, oil demand is lukewarm, but the production cuts from OPEC are certainly hitting home. Recall that on November 30, 2016, OPEC nations agreed to cut production by as much as 1.2 million barrels per day. This has spurred WTI crude production, and kick started the US oil industry. That’s why we aren’t seeing the sharp spikes in the oil price, but only marginal movements to the upside.

Trading Opportunity #4 – Citigroup Showing Promise

Citigroup Inc. (C) is trading 0.35% down, or $0.21 lower at $60.17 per share. At current prices, the company is valued at $166.82 billion with a laudable price/earnings ratio of 12.75. The stock has a dividend of $0.64 or 1.06%. What’s interesting about the stock in recent days is that it has enjoyed multiple successive sessions of strong gains. The recent pullback should not be viewed as a selling opportunity – it should be viewed as a value-driven investment opportunity for traders.

Whenever a stock rises sharply in a short period of time – as Citigroup Inc. did in February, it’s only natural for profit takers to exercise their options. On large-volume-driven trades, a share price reduction of $.21 is significant, and presents a great buying opportunity. We will invariably see more traders piling into the market as there is no doubt rate hikes are coming in 2017. Short-term weakness will invariably be followed by long-term strength in banking stocks like Citigroup. For binary options traders, it’s all systems go.