THE CURRENCY OUTLOOK CHECKLIST

This section will present a set of strategies and analytical steps to accomplish this result. There are many dimensions that define the optimal condition for a forex option trade. Certainly, foremost among them is the nature of the price action. But at the start of the process is the overall fundamental environment of the price action. It is essential for the
trader to develop a currency outlook for all of the currency pairs. In order to do this, the trader can use the following currency outlook checklist to establish a framework for deciding on the direction of a currency pair. The currency outlook checklist serves to keep the forex trader accountable to assessing fundamental issues. These are too often overlooked. The forex trader will greatly benefit by being able to complete this checklist. Some traders will look to be very detailed, while others will be more cursory in their decision process. Ultimately, anticipating a direction is the key first step in developing a forex option strategy.

Currency Outlook Checklist

1. Expected Economic Growth
Negative
Slowing
Uncertain
Steady
Slow growth
Fast growth
Decelerating

2. Inflation Latest
Central bank target
Actual target

3. Sentiment Indicators
Consumer sentiment
Manufacturing sentiment
Market Sentiment

4. Possible Recession
Housing starts
Home price
Yield curve inversion

5. Central Bank Interest Rate Policies
Lowering rate mode (.25 basis points, .50 basis points)
Nothing
Increase (.25 basis points, .50 basis points)
Binary option sentiment

6. U.S. Dollar Sentiment
Central bank currency reserves of dollars
U.S. dollar index
Trade-weighted index

7. Commodity Markets
Gold
Commodity index
Oil
8. U.S. Dollar Data

% Dollar holding of currency reserves of central banks
Foreign ownership of U.S. Treasuries—declining