It seems the script of having a protracted negotiation period is coming to fruition and the consensus view of the SPD/Green/FDP is looking more likely – the EUR has opened 7 pips higher, a rounding error and it could easily be faded in a few trades at this time.
There's a few events to move things along this week and a couple of risks to watch on the calendar spring out as China PMI (Thursday 11:00 AEST – consensus 50.2) and US ISM manufacturing (Sat 00:00 AEST – 59.5). Most of the focus though is towards central bank speeches from BoE Bailey (today 01:00 AEST), ECB’s Lagarde and then a raft of Fed speakers (see below) – Let’s see if they can spice things up, because while we saw volatility kick up early last week, with the VIX index hitting 28.79%, we see things more subdued again, with the VIX closing at 17.75%.
Here’s the weekly volatility matrix on key FX pairs and gold. I take the weekly implied (options) volatility (derived from Bloomberg) and divide by 15.9 to get the implied move through to Monday (expiry 4th) and project this to spot to see the implied range. I like to see what’s expected by way of movement and if the market, given the known event risk, is seeing an elevated risk of higher chance of movement.
(Source: Pepperstone - Past performance is not indicative of future performance)
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(Source: Bloomberg - Past performance is not indicative of future performance)
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