Fed Fuels Gold & Currency Volatility Shockwave as USD Drops
Jun 21, 2019 4:30 pm -04:00
by Rich Dvorak , Junior Analyst
VOLATILITY IN USD AND GOLD PROPELLED BY FED – TALKING POINTS
US DOLLAR (DXY) AND CURRENCY VOLATILITY (FXVIX) (INVERSE) – CHART 1: DAILY TIME FRAME (APRIL 18, 2018 TO JUNE 20, 2019)
That being said, weakness in the US Dollar threatens to continue. The sharp move to the downside in the DXY US Dollar Index has been matched by a spike in currency volatility – or FXVIX – as measured by an equally weighed index of Cboe’s 30-day implied volatility readings on the Euro, Pound Sterling, and Japanese Yen. As markets digest the Fed’s capitulation to the lofty interest rate cut expectations currently priced in, traders may see climbing currency volatility exacerbate USD downside which is suggested by the historical relationship and recent negative correlation between USD and FXVIX.
SPOT GOLD (XAUUSD) AND GOLD VOLATILITY (GVZ) – CHART 2: DAILY TIME FRAME (APRIL 18, 2018 TO JUNE 20, 2019)
Unsurprisingly, the topside gold price breakout has mirrored the collapse in interest rates and US Dollar depreciation. With XAUUSD now comfortably above technical resistance aligning with upbeat fundamentals, evidence of additional upside in spot gold appears to be hinted at by the explosion in gold price volatility (GVZ). In fact, XAUUSD just notched its highest close since September 2013 as GVZ skyrocketed to its highest level since April 2017. If US Treasury yields remain under pressure along with the dollar, spot gold’s advance risks accelerating as bullish sentiment mounts and pushes GVZ higher.
Source: DailyFX
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______________________________________________________
All articles, videos, and images posted on Dinar Chronicles were submitted by readers and/or handpicked by the site itself for informational and/or entertainment purposes.
Dinar Chronicles is not a registered investment adviser, broker dealer, banker or currency dealer and as such, no information on the website should be construed as investment advice. We do not support, represent or guarantee the completeness, truthfulness, accuracy, or reliability of any content or communications posted on this site. Information posted on this site may or may not be fictitious. We do not intend to and are not providing financial, legal, tax, political or any other advice to readers of this website.
Copyright © 2019 Dinar Chronicles
Jun 21, 2019 4:30 pm -04:00
by Rich Dvorak , Junior Analyst
VOLATILITY IN USD AND GOLD PROPELLED BY FED – TALKING POINTS
- Currency volatility is back on the rise as the US Dollar plunges in response to a dovish Fed
- Spot gold prices spike alongside gold volatility amid plummeting yields
- IG Client Sentiment data suggests that the recent downside in USD and upside in gold could continue
- Find out How to Trade Gold or learn more about the Traits of Successful Traders
US DOLLAR (DXY) AND CURRENCY VOLATILITY (FXVIX) (INVERSE) – CHART 1: DAILY TIME FRAME (APRIL 18, 2018 TO JUNE 20, 2019)
That being said, weakness in the US Dollar threatens to continue. The sharp move to the downside in the DXY US Dollar Index has been matched by a spike in currency volatility – or FXVIX – as measured by an equally weighed index of Cboe’s 30-day implied volatility readings on the Euro, Pound Sterling, and Japanese Yen. As markets digest the Fed’s capitulation to the lofty interest rate cut expectations currently priced in, traders may see climbing currency volatility exacerbate USD downside which is suggested by the historical relationship and recent negative correlation between USD and FXVIX.
SPOT GOLD (XAUUSD) AND GOLD VOLATILITY (GVZ) – CHART 2: DAILY TIME FRAME (APRIL 18, 2018 TO JUNE 20, 2019)
Unsurprisingly, the topside gold price breakout has mirrored the collapse in interest rates and US Dollar depreciation. With XAUUSD now comfortably above technical resistance aligning with upbeat fundamentals, evidence of additional upside in spot gold appears to be hinted at by the explosion in gold price volatility (GVZ). In fact, XAUUSD just notched its highest close since September 2013 as GVZ skyrocketed to its highest level since April 2017. If US Treasury yields remain under pressure along with the dollar, spot gold’s advance risks accelerating as bullish sentiment mounts and pushes GVZ higher.
Source: DailyFX
______________________________________________________
If you wish to contact the author of any reader submitted guest post, you can give us an email at UniversalOm432Hz@gmail.com and we'll forward your request to the author.
______________________________________________________
All articles, videos, and images posted on Dinar Chronicles were submitted by readers and/or handpicked by the site itself for informational and/or entertainment purposes.
Dinar Chronicles is not a registered investment adviser, broker dealer, banker or currency dealer and as such, no information on the website should be construed as investment advice. We do not support, represent or guarantee the completeness, truthfulness, accuracy, or reliability of any content or communications posted on this site. Information posted on this site may or may not be fictitious. We do not intend to and are not providing financial, legal, tax, political or any other advice to readers of this website.
Copyright © 2019 Dinar Chronicles
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