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.

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
EUR/USD
Mixed
Oil - US Crude
Bearish
Wall Street
Mixed
Gold
Mixed
GBP/USD
Mixed
USD/JPY
Bullish
More View more
Real Time News
  • Lately, capital has been flowing out of #EmergingMarkets and #ASEAN economies, pushing the US Dollar higher against their respective currencies Will this trend continue this week? Check out my latest fundamental outlook here - https://www.dailyfx.com/forex/fundamental/article/special_report/2020/09/28/US-Dollar-Rose-Capital-Fled-Emerging-Markets-SGD-IDR-PHP-MYR-at-Risk.html?CHID=9&QPID=917702&utm_source=Twitter&utm_medium=Dubrovsky&utm_campaign=twr https://t.co/iyFPD664Cb
  • It’s important for traders to be familiar with FX spreads as they are the primary cost of trading currencies. Understand a pair's spread here: https://t.co/S9CEcBm5Qe https://t.co/VNQpG1CUVM
  • $AUDUSD price action strikingly similar to that seen in 2002 - Break above the 1997 downtrend ignited a 106% surge, eventually peaking in July 2008 (0.9850) - Consolidation above downtrend preceded upside push - Bullish RSI divergence appears to signal cyclical upturn https://t.co/j3IumVbAlB
  • Heads Up:🇯🇵 Leading Economic Index Final (JUL) due at 05:00 GMT (15min) Expected: 86.9 Previous: 83.8 https://www.dailyfx.com/economic-calendar#2020-09-28
  • Heads Up:🇯🇵 Coincident Index Final (JUL) due at 05:00 GMT (15min) Expected: 76.2 Previous: 74.4 https://www.dailyfx.com/economic-calendar#2020-09-28
  • IG Client Sentiment Update: Our data shows the vast majority of traders in Ripple are long at 96.83%, while traders in EUR/GBP are at opposite extremes with 64.39%. See the summary chart below and full details and charts on DailyFX: https://www.dailyfx.com/sentiment https://t.co/MQNUIOEuMx
  • Forex Update: As of 04:00, these are your best and worst performers based on the London trading schedule: 🇦🇺AUD: 0.42% 🇬🇧GBP: 0.21% 🇯🇵JPY: 0.21% 🇨🇦CAD: 0.06% 🇪🇺EUR: 0.04% 🇨🇭CHF: 0.03% View the performance of all markets via https://www.dailyfx.com/forex-rates#currencies https://t.co/ta4Cy97vbC
  • Indices Update: As of 04:00, these are your best and worst performers based on the London trading schedule: Germany 30: 1.56% France 40: 1.56% FTSE 100: 1.23% Wall Street: 0.47% US 500: 0.39% View the performance of all markets via https://www.dailyfx.com/forex-rates#indices https://t.co/lA0TK0OTZQ
  • #ASX200 struggling to break above key resistance at 6000 after Westpac retracted its calls for an #RBA rate cut in October RSI hints at fading bullish momentum which suggests that a push towards the monthly low is on the cards, if 200-MA resistance (6020) remains intact. $XJO https://t.co/iXrCqbayfc
  • $AUDJPY poised to move higher after finding support at the 200-day moving average. $CADJPY eyeing a push back towards the yearly high $EURJPY perched atop key support after breaking below Rising Wedge support. Are further losses in the offing? $JPY https://www.dailyfx.com/forex/market_alert/2020/09/28/Japanese-Yen-Outlook-AUDJPY-CADJPY-EURJPY-Levels-To-Watch-.html?CHID=9&QPID=917708&utm_source=Twitter&utm_medium=Moss&utm_campaign=twr https://t.co/v03Ge14yvW
Valuing the S&P 500 in DAX, Gold in Bitcoin, VIX in Euro Volatility

Valuing the S&P 500 in DAX, Gold in Bitcoin, VIX in Euro Volatility

2017-03-03 04:13:00
John Kicklighter, Chief Strategist
Share:

Talking Points:

Comparing markets and assets can help highlight value, it can also identify changes in the broader system

• Overlays can offer a visual comparison, correlations present a statistical relationship, ratios can show relative value

Just as FX pairs value currencies relative to each other; we look at ratios from SPX/DAX, SPX/EEM, Gold/Silver, etc

See what live coverage is scheduled to cover key event risk for the FX and capital markets on the DailyFX Webinar Calendar.

There is a lot to learn from identifying the correlation between assets and markets. Seeing a common charge for equities across regions can speak to an appetite for growth-oriented assets. With a uniform advance across equities, emerging market assets and carry trades; we can see something more systemic: an appetite for 'risk'. Beyond simple recognition of correlated progress, we can find visual confirmation with overlays on charts or we can rely on statistical confirmation via correlation coefficients - both of which we refer to regularly enough.

Seeking relationships between dissimilar assets is useful, but recognizing the degree of their divergences can be just as telling of what is transpiring in the market. We can refer to the same visual or statistical tools utilized for confluence to shape contrast, but perhaps it is more useful to price one instrument via its counterpart. This should be a familiar concept for FX traders. All pairs that we trade find the value of one currency in terms of a second. EUR/USD reflects the value of Euro in terms of Dollars. Even the ICE Dollar Index derives its price from a trade-weighted contrast of major counterparts (the Euro is two-thirds of that backdrop). This view of value however is not restrained to currencies. All markets need a pricing instrument with which to set reference. Equity indexes are valued - directly or indirectly - in their local currency; commodities are generally priced in Dollar's and even more abstract measures price trades taken in opportunity costs of those left on the table.

We take this concept of relative value to establish the discrepancies that are arising in markets that seem set in their risk-reaching ways. What we find highlights greater contrast than perhaps many may have thought possible in current conditions. With the extraordinary climb in the S&P 500, we seem to have a clear preference for risk appetite via US assets. Yet, when we price the US benchmark in DAX (German) and FTSE (UK) indices; we see a very different assessment in appetite. Checking the positive correlation between US shares to the Greenback (curbing the appetite for US assets), we get a different view. Comparisons of preferred non-financial flag bearers (Gold and Bitcoin) offers a clear preference for the new and unregulated. Even a comparison between gold and silver speaks to a more controlled demand for safe haven than we might otherwise expect. We look at different relative values in today's Strategy Video.

Valuing the S&P 500 in DAX, Gold in Bitcoin, VIX in Euro VolatilityValuing the S&P 500 in DAX, Gold in Bitcoin, VIX in Euro VolatilityValuing the S&P 500 in DAX, Gold in Bitcoin, VIX in Euro Volatility

To receive John’s analysis directly via email, please SIGN UP HERE

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

DISCLOSURES