Talking Points:
• Already hovering at remarkably low levels, market volatility measures have pushed to extremes
• Complacency against a record high S&P 500 and before renewed financial threats presents serious risk
• A swell in volatility would best serve S&P 500 and EURJPY shorts
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We continue to hit new extremes in complacency and the implications for the markets will prove explosive. Low volatility is seen as a boon for investors looking to invest in assets considered 'risky' - like high yield currencies, emerging markets and even stocks. However, there are limits to how far this sentiment leverage can go. Worthy of its record highs, we find the S&P 500's measure of activity at an extreme low. Similar severe readings can be found in the FX market. In today's Forex Strategy video, we discuss the extreme volatility conditions we currently interpret as 'quiet' as well as the trade opportunities it presents.
Find out what event risk can possibly trigger the shift in volatility discussed in today's video with the DailyFX Economic Calendar.
