Skip to content
News & Analysis at your fingertips.

We use a range of cookies to give you the best possible browsing experience. By continuing to use this website, you agree to our use of cookies.
You can learn more about our cookie policy here, or by following the link at the bottom of any page on our site. See our updated Privacy Policy here.

0

Notifications

Notifications below are based on filters which can be adjusted via Economic and Webinar Calendar pages.

Live Webinar

Live Webinar Events

0

Economic Calendar

Economic Calendar Events

0
Free Trading Guides
Subscribe
Please try again
More View more
US Dollar, Gold, Crude Oil in Focus with Volatility on the Rise

US Dollar, Gold, Crude Oil in Focus with Volatility on the Rise

Rich Dvorak, Analyst

US DOLLAR, GOLD, CRUDE OIL PRICE OUTLOOK: MARKET VOLATILITY ON THE RISE AS RISK APPETITE FIZZLES OUT

Market volatility looks rekindled as the VIX soars and stocks drop sharply. Climbing measures of cross-asset volatility highlight how trader sentiment has started to show signs of deterioration. This follows the latest FOMC announcement, which was accompanied by a cautious tone from Fed Chair Powell, particularly when the central bank head discussed the risk that the labor force likely faces lasting structural damage amid 20-plus million Americans unemployed abruptly.

Trading Forex News: The Strategy
Trading Forex News: The Strategy
Recommended by Rich Dvorak
Trading Forex News: The Strategy
Get My Guide

Appetite for risk has also softened considerably alongside a re-acceleration in the trend of new coronavirus cases and hospitalizations. If sustained, governments might threaten to impose strict lockdown measures again and consumer confidence could collapse again. These recent developments have presented bullish tailwinds to popular safe-haven assets – like the US Dollar.

VIX INDEX & US DOLLAR PRICE CHART: 1-HOUR TIME FRAME (29 MAY TO 12 JUN 2020)

US Dollar Price Chart VIX Index

Chart created by @RichDvorakFX with TradingView

The US Dollar has ricocheted higher by about 1.5% over the last two trading sessions. As indicated by the DXY Index, US Dollar price action has rebounded broadly and follows skyrocketing measures of volatility such as the VIX Index. The US Dollar reversal higher could gain pace if risk aversion intensifies and currency volatility continues to climb.

USD Forecast
USD Forecast
Recommended by Rich Dvorak
Get Your Free USD Forecast
Get My Guide

VIX INDEX & GOLD PRICE CHART: 1-HOUR TIME FRAME (29 MAY TO 12 JUN 2020)

Gold Price Chart VIX Index

Chart created by @RichDvorakFX with TradingView

Gold prices have similarly enjoyed the latest return of risk aversion. The precious metal also likely benefits from central bank interest rate outlook anchored to zero for the foreseeable future. Cracking market sentiment and soaring cross-asset volatility could steer investors toward bullion and help bolster the price gold.

Gold Mixed
Data provided by
of clients are net long. of clients are net short.
Change in Longs Shorts OI
Daily -1% -10% -3%
Weekly -12% 14% -7%
What does it mean for price action?
Get My Guide

VIX INDEX & CRUDE OIL PRICE CHART: 1-HOUR TIME FRAME (29 MAY TO 12 JUN 2020)

Crude Oil Price Chart VIX Index

Chart created by @RichDvorakFX with TradingView

Crude oil price action has crumbled nearly 10% since the commodity hit resistance the 40.00-handle earlier this week. The price of crude oil, which is generally sensitive to risk sentiment and global GDP growth expectations, tends to hold an inverse relationship with market volatility.

Oil Forecast
Oil Forecast
Recommended by Rich Dvorak
Get Your Free Oil Forecast
Get My Guide

Correspondingly, crude oil bulls have struggled to maintain a bid under the pro-risk commodity. The direction of crude oil might continue mirror the VIX ‘fear-gauge’ and provide a bellwether for safe-haven demand in turn.

-- Written by Rich Dvorak, Analyst for DailyFX.com

Connect with @RichDvorakFX on Twitter for real-time market insight

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.

DISCLOSURES