Will Recent European Events Affect The Euro Minimum Bid Rate Report?

On Thursday, July 16, 2015, the six members of the European Central Bank (ECB) Executive Board and the 16 governors of the euro area central banks place their votes on where to set the interest rate. This is called the Minimum Bid Rate. Their decision is released in a monthly report that is watched by traders since interest rate changes are the primary factor in currency valuation.

Forecast 0.05%
This month, the forecast is expected to remain at the same rate as last month at 0.05 percent. However, if the report is released with a higher than expected rate, it should be considered bullish or positive for the EUR. If it comes out lower than expected, the opposite would be the case with it being bearish or negative for the EUR.

Suggested Trade
The suggested strategy to use for this type of news trade is an Iron Condor using Nadex Spreads. For this particular event, you would use the EUR/USD buying a lower spread and selling an upper spread. The floor of the upper spread should be equal to the ceiling of the lower spread and you should enter when the market is trading close to that level. You can enter as early as 6:00 AM with an 8:00 AM expiration time. Your minimum profit potential should be $20. If that does not seem like enough, you can have multiple contracts, making sure that you have an equal amount of buys and sells. If any of these parameters cannot be met, there is no trade. Don’t force the trade.

Press Conference Follows
Although it may not affect this trade because of the expiration time, it is important to note that 45 minutes after the Minimum Bid Rate is released, the ECB holds a press conference. This conference lasts approximately an hour with a prepared statement being read and then opened to press questions. During this conference, high levels of volatility can exist in the market.

For a more in-depth look at the workings of an Iron Condor, please read The Awesomeness Of An Iron Condor. To further your trading education, go to www.apexinvesting.com.