The month of March is normally synonymous with madness. For traders that madness equates to volatility. As we move midway into this March there is anything but madness going on in these markets. That doesn’t mean that the remainder of the month won’t be met with moves a minute but duplicating the first half of the month would not excite too many traders.
The bigger picture here and likely the reason why volatility is low is that the global economies continue to grind back towards normalization after the 2007/08 recession. That grinding pace has investors wary of reinvesting back into equities at full-speed. One would think though that the lack of investor conviction and the uncertain economic outlook would be cause for such volatility.
There have been a few exceptions this month. Yen traders will not soon forget the Non-farm Payroll day in the US. Yen pairs started to back-peddle and did not stop until the following Monday afternoon in London. That turned out to be a nice 4 yen move in the market for many Yen pairs. The following Friday also saw some significant volatility in the Canadian Dollar. Although unless you were at the trading desk at 7am est. and took part in the immediate move that followed the Canadian employment release you may have missed 70% of the move.
The good news here is that there is a pattern developing here. Until the markets find their stride again those in search of volatility may have to target the tier one economic data releases. These are easy enough to find as well. On Currensee the Research Dashboard has the global Economic Calendar where it lists daily releases.
Front and center this week looks to be the Euro Zone ZEW survey. Yes it will be released quite early for US and Canadian traders. That said expectations are for another contraction in business sentiment, to 43.6 from 45.1, and a contraction in the Current Conditions from to 52 from 54.8. With such worries on the global economy it is easy enough to see how this release has potential to create a little vol.
The US has a full calendar on Thursday, everything from consumer inflation to jobless claims to money supply figures. By now the US jobless claims will be void of the Mid-Atlantic snowstorm effect and should be able to better represent the labor market. The UK also has a few important releases including their Employment report. That said the majority of the UK employment data is released on a 3 month moving average which is intended to diminish post release fluctuations. The big move this week may be in the Canadian Dollar again and on Friday their retail sales and CPI figures certainly pose as a market stimulus. The retail sales figures in particular will garner attention as expectations are for a 0.6% m/m rise which follows a 0.4% m/m rise the prior month.
Madness will return, volatility will jump to higher levels and traders won’t be able to sleep in anticipation of catching the next move. When will this happen? No one is certain, but checking the Economic Calendar on Currensee will provide some clues as to when it may happen.
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