Markets: Euro Hits 16-Months Low Against Dollar

by Francesco Placci

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Among the markets that end the week higher, there are Metals, Cereals, and Soft Commodities. The top performers in the Soft Commodities sector are Orange Juice, Coffee, and Cotton (which remains near its all-time highs). 

Among the markets that end the week lower, there are Energy futures, with Natural Gas falling 8%, and currencies, with Euro near its lows.

To learn more about how the markets moved this week, as well as about historical and implied volatility, check out our weekly review!

 

Transcription

Hey everyone! One of the coaches of Unger Academy and welcome to our weekly chat in which we see what happened in the markets over the last five days.

So let's start with stock indexes, where we can see some varied returns this week. Nasdaq is the one that suffered the most, falling about 2%. However, let's keep in mind that last week it set a new all-time high, so it's pretty normal that it reacted in a bearish way after such a long and significant rise. Finally, here's Mini S&P 500, which went slightly down. As for the European stock indexes, they are the only markets in this sector that went up in the last 5 days.

The Bond sector was also pretty weak. Look in particular at the T-Bond, which fell about 0.6% this week. Over the last two weeks, it had also been recovering quite strongly. And the same goes for the Treasury Note and Bund.

On the other hand, the energy market went a bit down this week. If we look at its one-month performance, we see that the energy sector's rise has stopped since about one month, especially Natural Gas, which is falling about 8%. However, let's not forget that the current price levels of Natural Gas are really high compared to 5 or 6 months ago.

On the contrary, the metals sector was completely positive. In particular, we see 4% returns on Silver and Platinum. And over the last two weeks, the downtrend of these markets was somehow reversed. Let's also take a look at Platinum. If we look at a longer time horizon, we can see that on a 3-month horizon the returns are pretty marginal.

Mixed returns for the cattle sector too, where there's nothing particularly interesting to mention. Soft Commodities, on the other hand, were are all positive. The ones that performed the best were Orange juice and Coffee, which both gained 7%. The performance of Cotton is interesting too since it's still on an all-time high.

As you can see, the Cereals sector is also positive, and the markets that performed best are Soybean Meal and Wheat, which in particular shows the most bullish trend of the sector.

Now let's move on to the currency markets. As you can see, currencies are all negative this week. Among them, the trend of the Euro against the Dollar is particularly interesting. It went to 1.1444, so it's really on low levels compared to the last 12 months.

Finally, let's take a look at Bitcoin, which gained 3.69% this week. Given the volatility of this underlying, this gain seems quite marginal. But during the week, Bitcoin managed to break through its all-time high. However, as you can see, now it's going through a retracement phase.

Alright, let's move on to volatility, the historical volatility of stock indexes. As expected, we can see that the volatility percentiles are all very low. We are at an all-time low in the short term, and even on a longer time horizon, of about one year, we can see that the returns are on low percentile values.

Now let's also take a look at implied volatility, which in this chart is represented by the Volatility Index on the S&P 500. As you can see, the levels of implied volatility are also quite low, and they are more or less the same as last week.

The curve, that is, the term structure of volatility, is in complete contango, which is the classic term structure of implied volatility during bull market phases. And the Vix is also relatively low. So at the moment, traders don't seem to be worried about the future performance of stock indexes.

Let's move on to the rollover calendar now. Today we've rolled over Cotton, while next week, we'll have to roll over the Crude Oil future and the Vix future, which are going to expire.

Alright, guys. If you want to learn more about us, and about how we teach trading here at Unger Academy, by following the method of Andrea Unger, the only 4-time world trading champion with real money, click on the link that you'll you find in the description of this video.

And for any questions, if you have ideas or suggestions, please leave a comment and we'll write back to you.

That's all for today.

And until next week, goodbye everyone!

 

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Francesco Placci

Hi, I'm Francesco Placci, a professional trader since 2005 thanks to the systematic approach to the markets.

My skills range from trading on index futures to bonds, from stocks to commodities, with a particular focus on volatility and options, which I consider to be among the most versatile and fascinating instruments available to traders.

After an experience with leading Italian credit institutions where I learned the basics of institutional finance, I became a successful independent trader, with great personal satisfaction.

Founder of Algoritmica.pro, in 2019 I joined Unger Academy as head of Research and Development.