Geopolitical developments and stronger US data push volatility to new highs across the board – Volatility Watch

apr 16, 2024 om 8:02 am GMT- Achilleas Georgolopoulos, Stefanos Oikonomidis

• Volatility remains extremely high across the FX spectrum

• Commodities volatility reaches new highs; Bitcoin poised for smaller moves

• Equities volatility is off the charts led by the S&P 500 and DAX 40 indices

Volatility in EUR/USD remains very high as the pair recorded a decent weekly drop following the stronger US CPI data. Geopolitical events have also played a crucial role in pushing volatility higher in the remaining currencies, including the yen crosses, with the market now looking for bigger price movements going forward - as the threat of intervention in dollar/yen also looms.

Volatility in the commodities space has also jumped higher, with gold, silver and WTI implied volatilities recording new 30-day highs and thus capturing accurately the market’s current angst.

Turning to risky assets, stock indices are firmly in the red following the latest Middle East developments and the pushing back of rate cut prospects by the Fed. Volatility remains very high, raising the possibility of further highly volatile sessions ahead.

In the meantime, bitcoin continues to experience relatively lower volatility. This is rather odd considering the volatility seen in the equity markets and the imminent halving event.