VIX INDEX ‘FEAR GAUGE’ AFTER A BUSY DAY, BELOW 30 FOR A FIFTH TIME THIS MONTH; A RELENTLESS RISK RALLY, STEERS THE CROSS-ASSET VOLATILITY, LOWER
- VIX index plunged back below 30 and while the S&P 500 has increased despite the skepticism regarding a potential exposure to feline corona virus vaccine
- Cross-asset volatility is crushed as traders capitulate to the risk-rally-and – the refuge sale
- The US Dollar could remain under pressure, and the crude oil may extend its recovery, if the market sentiment remains imperturbable
The VIX Index, or fear gauge,’ pivoted to the health as a trader that risk appetite continues to flourish, and expected share volatility of the market goes away. With global equities on a tear higher since the trough in mid-March, led by 40% surge in the Nasdaq index, investor sentiment has improved significantly, and look at it as one of the major contributing factors to the 50-decrease of the INDEX of the levels often seen during the financial crisis.
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As the central bank the liquidity flowsand the market is turning more optimistic with the corona virus will lock the reopening of ongoing efforts, and the VIX Index may remain under pressure. This is particularly the case with the corona virus vaccine hope showing the potential to exacerbate the risk-on mood and the lower notch by the assets of the volatility of the reference indices.
VIX INDEX PRICE CHART, DAILY TIME FRAME IS IN DECEMBER 2019 TO SEPTEMBER 2020)
In spite of spot VIX plunging to the 28 mark, and the current month lows, and the the volatility squeeze maybe soon fade. This is to consider VIX index futures contracts across the term structure remained relatively anchored at the 30 handle. Alsothe VIX can find the technical support offered by a confluence of its 200-day exponential has become the most popular and 78.6% The Fibonacci retracement the level of the year-to-date trading range.
VIX INDEX, AND CROSS-ASSET VOLATILITY REMAIN UNDER PRESSURE AS STOCKS & CRUDE OIL CONTINUE TO CLIMB
Several other cross-asset volatility of the benchmark indices, were subjected to a downward pressure at the same time, the VIX. For example, the crude oil volatility (OVX) has been completely reversed in the explosion-after commodity price is negative last month as demand picks up with economic activity. The US Dollar’s dominance seems to have disappeared, and probably helped to facilitate the retracement lower to the the volatility of the currencies (FXVIX).
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However, although Chinese stocks drop in response to the Senate bill supervisory just pass the test, there is the outstanding threat that the united statesChina trade tension climbing once more. The VIX Index, and the expected volatility for the emerging markets shares (VXEEM), could therefore tear on the back and more. This could bode ill for the pro-risk assets like the S&P 500 or crude oil, while perhaps providing a boost to safe-haven securities like the U.S. Dollar.
Continue Reading US Dollar Outlook: DXY Zen Ahead of FOMC minutes
— Written by Rich DvorakAnalyst for the DailyFX.com
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