Silver Wheaton is having a rough trading session in the market today, and for good reason. Yesterday, the meeting minutes from the July FOMC meeting were released. An overwhelmingly hawkish tone in the release led investors to believe that a rate hike is on the way. Today, we’ll talk about the meeting minutes, what this has to do with Silver Wheaton, and what binary options traders should watch when trading the asset moving forward.

FOMC Meeting Minutes Were Surprisingly Hawkish

The Federal Reserve has been planning to increase its interest rate some time in the year 2016 since late last year. However, economic blues have slowed the process. Nonetheless, the FOMC meeting minutes that were recently released show that the Fed believes that we are close.

In the document, the Fed proved to be overwhelmingly optimistic. This is a sharp change from recent meeting results that we have been provided. The Fed pointed to the fact that labor markets are strengthening as a reason for their hawkish outlook. Here’s what I believe to be the most important excerpt from the document…

“Consistent with its statutory mandate, the Committee seeks to foster maximum employment and price stability. The Committee currently expects that, with gradual adjustments in the stance of monetary policy, economic activity will expand at a moderate pace and labor market indicators ill strengthen. Inflation is expected to remain low in the near term, in part because of earlier declines in energy prices, but to rise to 2 percent over the medium term as the transitory effects of past declines in energy and import prices dissipate and the labor market strengthens further. Near-term risks to the economic outlook have diminished. The Committee continues to closely monitor inflation indicators and global economic and financial developments.”

What Does This Have To Do With Silver Wheaton

While it may seem as though the FOMC meeting minutes and Silver Wheaton are two very different topics. The truth is that the two are very closely related. In fact, there are two reasons that this type of data tends to have such a profound affect on the value of the stock…

• Silver – Silver Wheaton, as its name would suggest, is a company that is largely focused on silver. As a result, the company experiences heavy exposure to spot-market prices. If the Federal Reserve does make the decision to increase its interest rate, the value of the USD will rise, putting pressure on silver. As a result, we’ll likely see declines in the commodity. Because this is the commodity that Silver Wheaton makes its money from, this will likely lead to declines in the value of the stock.

• Market Side Effects – At the end of the day, increased rates aren’t a good thing for the market. With increased interest rates comes less lending and more saving. Unfortunately, this leads to declines among corporations. With less money to go around, Silver Wheaton could take a big hit!

What Binary Options Traders Should Be Watching For

When trading Silver Wheaton binary options, there are two things that you’ll want to watch very closely. First and foremost, pay close attention to any developments surrounding the Federal Reserve’s interest rate. As mentioned above, changes to the rate could lead to big movement in the stock. Also, keep an eye on global economic conditions. While the Fed’s plans to increase rates threatens silver and Silver Wheaton, economic conditions elsewhere could continue to lead to global increases in safe haven demand, helping the value of the stock to climb anyway.