S&P 500 PRICE OUTLOOK: STOCK MARKET ADVANCES DESPITE GROWING CORONAVIRUS SECOND WAVE RISK AS VIX ‘FEAR-GAUGE’ & US DOLLAR
S&P 500 PRICE OUTLOOK: STOCK MARKET ADVANCES DESPITE GROWING CORONAVIRUS SECOND WAVE RISK AS VIX ‘FEAR-GAUGE’ & US DOLLAR DECLINE
- The S&P 500 trades again above the three,100-price degree as shares proceed to development larger
- US Greenback drives decrease alongside the VIX Index ‘fear-gauge’ regardless of coronavirus second wave danger
- S&P 500 might mirror the course of commerce warfare linked USD/CNH as US-China rigidity festers
Shares edged larger on Monday measured by a 0.65% advance recorded by the S&P 500 Index. Inventory market energy was mirrored by the tech-heavy Nasdaq particularly with the benchmark printing a contemporary document shut.
| Change in | Longs | Shorts | OI |
| Every day | 14% | 6% | 9% |
| Weekly | -9% | 2% | -2% |
Bullish fairness traders seem comfortably within the driver seat nonetheless after S&P 500 futures staged a steadfast restoration after opening deep in unfavorable territory to start out the buying and selling week. This comes regardless of just lately introduced Apple retailer closures and rising danger {that a} coronavirus second wave would possibly loom.
S&P 500 PRICE CHART, VIX INDEX OVERLAID: 1-HOUR TIME FRAME (29 APR TO 22 JUN 2020)
Correspondingly, unfazed market sentiment has triggered the VIX Index, a well-liked ‘fear-gauge’ that displays 30-day implied volatility for the S&P 500, to unwind its 11 June spike larger. If the VIX Index declines additional and takes out final week’s low, it might point out that traders stay optimistic with their market outlook, which could open up the door for the S&P 500 to increase its advance.
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US DOLLAR INDEX PRICE CHART, VIX INDEX OVERLAID: 4-HOUR TIME FRAME (22 APR TO 22 JUN 2020)
Chart created by @RichDvorakFX with TradingView
In the meantime, because the VIX drifts decrease, the US Greenback Index (DXY) appears prefer it has began to expertise one other episode of promoting stress. This follows an tried rebound staged by the broader US Greenback over the past two weeks. If measures of implied volatility or market uncertainty proceed to say no, it might point out that the US Greenback would possibly face sustained headwinds that preserve the DXY Index underneath stress.
That stated, upcoming PMI information has potential to spark a return of demand for safe-haven currencies, just like the US Greenback, if the main financial indicator fails to verify the v-shaped financial restoration thesis. Based on the DailyFX financial calendar, the June 2020 flash PMI for the US manufacturing sector is predicted to cross the wires at 48.Zero and can be in comparison with the prior studying of 39.8.
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S&P 500 PRICE CHART, SPOT USD/CNH OVERLAID: DAILY TIME FRAME (03 NOV 2017 TO 22 JUN 2020)
Chart created by @RichDvorakFX with TradingView
Along with market sentiment surrounding coronavirus second wave danger, the specter of rising US-China commerce uncertainty stays noteworthy. The USA simply added 4 extra Chinese language-state media shops to its designated international missions record requiring further oversight amid the newest re-escalation of Sino-American rigidity. Spot USD/CNH perked up instantly after this headline crossed the wires because the US Greenback strengthened towards its Chinese language Yuan counterpart.
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Seeing {that a} typically robust inverse relationship is often held between the S&P 500 Index and spot USD/CNH value motion, shares might quickly face a day of reckoning, which is a bearish inventory market state of affairs that may garner extra credence if USD/CNH retains ticking larger.
Maintain Studying – USD/CAD Value Outlook: Canadian Greenback Climbs with Crude Oil
— Written by Wealthy Dvorak, Analyst for DailyFX.com
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