DailyFX 1-Week Volatility Index www.dailyfx.com

http://www.dailyfx.com/forex/fundamental/article/weekly_strategy_outlook/2010/11/01/Forex_Strategy_Outlook_Volatility_Expectations_Warn_of_Big_Moves_In_Week_Ahead.html

Market Conditions Summary


Elevated volatility expectations ahead of a pivotal US Federal Reserve interest rate decision warns of sharp currency moves in the week ahead, and traders should actively control risk ahead of major event risk. Our DailyFX 1-Week Volatility Index is now at its highest levels since the ‘Flash Crash’ as FX Options markets gear up for pronounced exchange rate swings. Such an environment favors volatility-friendly Breakout-style trading systems, but traders should manage position size ahead of what threatens to be a challenging week of price action.


The upcoming US Federal Reserve interest rate announcement is undoubtedly the major source of market uncertainty and hence volatility expectations. Yet speculators should not ignore an otherwise-packed week of other major central bank decisions and end-of-week US Nonfarm Payrolls data. It is especially difficult to determine proper strategy biases amidst such event-driven volatility, and we urge caution in trading in too much size through the days ahead