Trading insights: VIX +9% last 5 days, busy economic calendar today

Market Talk

Product spotlight:

The VIX volatility index is the global benchmark index for measuring investor expectations for the relative strength of the price changes of the S&P 500 Index.

Basically, the VIX can be used by investors and traders to measure how fast the S&P 500 index price changes as a way to get an understanding of how investors “feel” at a given period of time.

Chart 1

Chart 1 illustrates the five day relative percentage performance of the VIX Volatility Index.

The VIX vs the S&P 500

Chart 2 illustrates the year-to-date relative price and percentage performance of the VIX volatility index vs the S&P 500 stock market index.

The Fear factor

• As a general understanding of the VIX, when the VIX price is above 30 it can imply higher volatility on the way (bigger price swings on the S&P), as investors become more uncertain about the stock market.

Stress-free?

• As a general understanding of the VIX, when the VIX price is below 20 it can imply that lower volatility is on the way (smaller price swings on the S&P), as investors become more confident about the stock market.

Yes, the VIX is a tradable product that traders can employ to speculate on changes in investor sentiment

• Speculative traders with the view that markets will become more uncertain may seek to buy the VIX as a way to express that view.
• Speculative traders with the view that markets will become more certain may seek to sell the VIX as a way to express that view.
• Hedges might use the VIX to “protect” a portfolio of stocks using hedging techniques

The above is a general commentary about the VIX for speculative product users. Hedging strategies do not imply traders will not avoid market risk.

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Today’s economic calendar

Key points to note:

New Zealand kept its interest rate at 5.5%, NZD strengthens against:

• NZDJPY +0.4%
• NZDUSD + 0.5%
• NZDCAD +0.6%
• NZDCHF +0.5%

United Kingdom Core inflation above market forecast

• Core held at 6.9% vs the expected 6.8% year-on-year

United States housing starts in focus, high price action across USD assets expected upon the release

United States FOMC meeting minutes, high price action expected upon the release of the previous US Fed policy meeting minutes

Source: TradingView / J. Knobel August 16 2023 7:14 AM UTC

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Trading prospective:

USD/CAD upside prospects remain

Technical commentary: USD/CAD

Current price 1.3493 remains above its 9 day and 18 day moving averages (bullish), tentative upward price trend line with a near 40 degree angle being observed (see chart) adds speculation that price could continue to appreciate (see chart price trend since August 2023), DMI above its signal line suggest trend strength remains intact. Therefore further upside prospects for an extension move towards the 13 week highs near 1.3650s (see chart) can not be ruled out. Downside risk seen below the 1.3350s (see chart).

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