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Volatility behind oil futures was relatively tame throughout Monday aside from a brief period during the early afternoon hours of the US session. Nonetheless, this short-lived move was momentous enough to span a frequented range loosely established between $80.50 and $78.
The EURGBP has soared but the rally may be part of a triangle. The Yen crosses have rebounded in what are probably small 2nd waves.
Forex options markets volatility expectations have picked up considerably ahead of a busy week of global economic event risk, and currencies will likely see major moves in the days ahead. The infamous US Nonfarm Payrolls report will cap a jam-packed week of top-tier indicators in the US, Europe, and Asia, and our 1-week Volatility Index has picked up accordingly. We subsequently favor volatility-friendly and price-following Breakout and Momentum trading strategies, while slower-moving Range systems may see a difficult week of trade. The major caveat to this analysis is that sharp moves do not guarantee price trends. That is to say, the US Dollar may see substantial day-to-day swings but finish the week unchanged—a very clear and plausible risk to our Breakout and Momentum systems.
Budget deficit issues continue to plague the single currency and were a main catalyst for overnight weakness. The Euro has begun to erase earlier losses as positive equity markets have lent support.
The Swiss Franc has become the stand out amongst European currencies as the Euro is plagued by Greece’s troubles and its implication for the other European Union members, while sterling remains under assault with the prospect of additional QE. A dismal mortgage approval number-lowest in eight months-sent the pound reeling across the board, losing 350 pips against the Franc in early trading.
The Australian dollar is likely to face increased volatility over the next 24 hours of trading as the central bank is widely expected to hike the benchmark interest rate to 4.00% this month, and the central bank may adopt a hawkish outlook for future policy as economic conditions improve.
The Euro failed to break above the 20-Day SMA (1.3666) during the overnight trade as policy makers held a cautious outlook for the region, and the single-currency is likely to maintain the downward trending channel carried over from earlier this year as t…
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