Compared to the period ending on September 18, the EUR Index showed a similar result of close to no change over the five trading days, albeit spent considerably more time below the baseline. The index long-term changes remained unsettled, as monthly progress exceeded zero after the previous reading of –0.59, while yearly decrease deepened from –0.01 to –0.67. The Euro depreciated against three out of eight observed peers, most notably the dollar and the yen, which gained more than 1% over the single currency. The only currency to lose as much against the Euro was the Kiwi that tumbled down at the end of the period.
With the turbulence of the previous week’s events almost out of the sample, volatility notably subsided in the past period, and both peak highs and portions of overturbulence generally decreased. The Euro with its 39% of elevated volatility was the second calmest currency after the Swedish krona, and one of three currencies that ended up with their average volatility index values below one. In terms of volatility index levels, the past period was the most tranquil one for the single currency since late August.
The single currency’s significance measure spent the past five trading days on unusually weak levels. Holding around its average value of 0.19, the composite failed to exceed even the 0.35 points mark. Compared to the previous short-term readings, almost all Euro correlation components lowered their average values. The most noticeable drop occurred in the correlations with EUR/CAD. The Canadian CPI report has caused the rise of the CAD Index and, as a consequence, made the bond between EUR/USD and EUR/CAD negative. EUR/USD correlations with the Pacific currencies were the only ones to show some strengthening.
The strengthening of the USD Index has been gaining pace since the Fed’s monetary policy press conference on September 17, and by the end of the past period finally drove it to become the top performer. The index posted a 1.62% growth over the past week, almost 0.5% above its closest counterpart, as the dollar gained more than 1% over six of its observed peers. The USD Index also took a clear leading position in respect to the long-term advancements, with both half-yearly and yearly growth standing at over 6%, and monthly change reaching above +4%.
Volatility generally normalized during the past week, with the portions of overturbulence going down from their recent extreme levels and holding closer to the previous month’s numbers. The USD Volatility Index reported an average of less than 1 for the first time since late August, but still indicated greater instability than the overall market’s measure. The dollar was fourth both in terms of the index levels and the portion of elevated volatility, with its readings exceeded by those of the Asia-Pacific currencies on both accounts. Consistently, AUD/USD and NZD/USD were the only components with the portions of elevated volatility as high as 50%.
The Greenback’s significance measure and its components were strengthening throughout the period, raising their average values above the historical levels. Nevertheless, the USD/EUR correlations with other European currencies’ pairs were the only ones to gain some points over the previous period’s short-term values. The strengthening was especially noticeable in the bond between USD/EUR and USD/SEK. In turn, components with Pacific currencies have lost in both long-term and short-term values, lowering by over 0.1 points from the previous period.
Almost a month-long decrease of the yen index, caused by the Japan’s Pension Fund reform, seemed to have come to an end, and the past periods saw it start to recover. During the past five trading days the JPY Index was sharing the second-best’s status with the CAD gauge, but disappointing Canadian GDP pushed the Loonie down, and the yen ended the period losing only to the Greenback. The 2.08% decrease made the Kiwi the main loser of the period. The NZD Index was on a downtrend since the beginning of the period, and the confirmation of the RBNZ intervention in the currency market last month resulted in a dramatic fall of the Kiwi to its new one-year low.
The period was associated with moderate volatility values and medium portion of elevated volatility for both the market and the yen. As can be seen from tables, the New Zealand dollar was the period’s most volatile currency – its the Volatility Index reached the 5.27 level early on Monday. Moreover, the greatest peak of the market volatility took place at the same moment, and the JPY Volatility Index reached its maximum of 1.69 a couple of hours later. Despite the fact that a host of influential news on Japan’s economy was released during the period, there was no evidence of significantly growing turbulence which means no strong reaction to them.
During the period the correlations of JPY pairs were mostly on their historical average levels. Only Tuesday stood out for low correlations that are reflected in the heavy lower tails of the component distributions.
After a week of moving back and forth around the baseline, the Euro seemed to settle for a downtrend in the past three trading days. The single currency weakened against five of its eight observed peers, most notably against the Swedish krona that added its own strengthening to the Euro’s decline after a surge in the country’s retail sales. Consequently, the EUR Index was on its way to posting the greatest loss among the observed gauges, but managed to rebound and outpace the pound, the New Zealand dollar, and the Swiss frank. The monthly change came to have the post-September-rate-cut level as a base, and showed that the index only gained slightly more than half a percent over those values.
The observed period was rather turbulent for both the market and the single currency as the proportions of elevated volatility were near 50%. The New Zealand dollar remained the most volatile currency, and early on Thursday its volatility index reached the 5.31 points mark, taking the market’s index up to its maximum.
Putting aside the Tuesday’s peak, the Euro significance measure held on its usual feeble levels with an average of 0.2 points. For the third consecutive period, abnormally frequent negative values appeared in many EUR/USD components, with heavy lower tails of correlation distributions especially pronounced in combinations with EUR/JPY, EUR/AUD, and EUR/NZD. EUR/USD-EUR/NZD component was also notable for strengthening of its unusual negative bond, as its average shifted to –0.16 from the previous readings of –0.01 and to an even sharper contrast with the historical values. Another anomaly was the EUR/USD-EUR/SEK component that lifted its average 0.15 points above historical levels.
After a period of rapid growth in the end of September, the USD Index spent the previous week much closer to the baseline, mostly holding among average performers. However, Friday proved to be a defining day, as the index jumped above its top-three counterparts and finished the period with the greatest weekly gain. Its long-term changes also came to stand on the highest levels among the observed currencies, with monthly gauge at around +4%, and half-yearly and yearly measures at over +7%. The dollar gained more than 1% against half of its peers, including greater than 1.6% growth against the pound and the Swiss franc.
Overturbulence measure crept back to 50% after seemingly returning to its historical levels at the end of September. With 47% of elevated volatility, the dollar was more turbulent than the pound, the Swedish krona, and the Loonie, but much calmer than its Pacific peers, whose gauges stood at around 60%. The USD Volatility Index posted the average of over 1 point and the second highest maximum, reaching above 3 points for the first time since the Fed’s monetary policy press conference on September 17. Its most turbulent component was NZD/USD index, while EUR/USD gauge reported the highest spike.
The U.S. dollar’s significance measure was fluctuating around 0.59 points mark during the period, and managed to rise up to the level of 0.82 at the end of the week. Almost all components showed the upward trend, and average correlations strengthened compared to the previous values. Correlations between EUR/USD and USD/SEK were the only ones to deviate from the pattern. Releases of the European manufacturing PMI weakened the bonds with pairs containing European currencies, with especially significant fall observed in pairs with the Sweden krona.
The Japanese yen was the best performing currency in the period from October 1 till October 7, as its currency index advanced considerably on growing service sector of the economy and unchanged monetary policy stance from the Bank of Japan. The largest increase was seen exactly on Friday, when the BoJ made its final decision on interest rates, as it helped the Japanese currency to end period with a jump of 1.23%. Among worst performers, the British Pound’s index dropped 1.14% on disappointing news on manufacturing and services activity, even though construction sector expanded. The single European currency, in turn, ended the period virtually unchanged.
Both the elevated volatility proportions and the values of Volatility Indexes of the AUD/USD currency pair were above market average levels during the period. It is worth pointing out that especially the AUD/NZD cross was unusually dynamic and became the most volatile pair in terms of elevated volatility proportion past week. The highest peak of the volatility was also reached by exactly the same currency pair, even though released data was not supposed to drive this pair so much. However, the largest point for volatility index for this pair was reached at 6.15 points.
The components of the Australian dollar significance measure showed strong correlations over the observed period. The short-term correlations between AUD/USD and other AUD crosses varied from 0.58 to 0.78. The only exception was correlation with AUD/NZD, where a drop into negative territory provided the component the weakest result of the week, as its correlations stood at minus 0.17. Compared to the 20-day values, most of the correlation pairs have lost 0.01-0.20 points, but AUD/JPY pair added 0.03.
Summary
[ul]
[li]September’s release of Dukascopy Sentiment Index report shows that professors around the world remain pat on the global sentiment, as the corresponding short and long-term gauges were unchanged from the previous month. The index stayed at 0.59 and 0.69 for the six-month and three-year outlooks, respectively. The major economies continue to combat slowing inflation, the malaise which has been spreading among such countries as the US, UK, the Euro zone members, Japan etc. On top of that, political instability continues to weigh on experts’ outlook.
[/li][li]Not only business climate and consumer morale continued to deteriorate in the Euro bloc: experts who participated in the September’s poll have also been losing faith. The short-term outlook has been clouded by dangerously low inflation, historically high unemployment rate, and ongoing geopolitical crisis in Ukraine, which has jeopardized economic growth in the Europe’s number one economy. The ECB was forced to act again in September to save the flagging economy. However, the long term outlook improved slightly.
[/li][li]Sentiment index for the North American economy rebounded from the last month, with both indexes increasing. The US economy continues to show moderate pace of expansion and remains the leader in the region, while Canada’s economy unexpectedly stalled in July, suggesting the pace of the country’s recovery might have eased in the third quarter.
[/li][li]While China is experiencing bumpy business activity in both manufacturing and services sectors, as well as property slump, and Australia’s economy is seen to remain weak this year, New Zealand continues to surprise economists with its sound economic growth, and officials in Japan remain upbeat on the economy. Experts also were upbeat on the region’s short and long term prospects.
[/li][/ul]
In the period from 3rd to 9th October, the Europe’s shared currency has performed well, as it managed to gain against seven of its eight observed counterparts. The biggest advance has been witnessed versus the Swedish krona, that failed to keep its bullish momentum from the last week. As a matter of fact, for most of the time the Euro was not among the best performing currencies; however, by the end of Thursday it reached the second best-performing position. Moreover, the increase was also spurred by the underperformance of the other currencies, as most of them remained unchanged or posted losses in the period.
Even though the Euro area’s currency demonstrated some sharp moves on Friday and Wednesday, in general the elevated volatility portions were slightly above the 30% mark, which is below the past overturbulence levels. The most volatile currency this week was the U.S. Dollar; however, not to extreme levels. At the same time, the Kiwi has lost its turbulence, after reaching 74% level last week.
Excepting some minor dips and climbs, the significance of the Euro, measured as an average correlation between various Euro crosses, was around its medium levels of 0.20. For some time on Friday and Monday the measure fell down to tenuous area; however, later managed to recover to more solid levels. The decline was caused by most of the components sliding to weakly negative values, suggesting that the single currency was not on the strong governing side of the pair movements. Nonetheless, the lack of important Euro zone’s events in the period contributed to no significant changes. At the same time the gauge is not indicating that more market participants have started looking in other currencies.
After many weeks of strong performance, the previous period’s feebleness turned into the last week’s downfall, as the USD Index posted its first substantial loss since late June. The index spent the period below its counterparts, losing almost 1% of the base value over the week and shifting its monthly growth to +1.8% from previous +4.0%. The Greenback weakened against all its observed peers, dropping 2.2% against the Yen and more than 1% against the Swiss franc, the New Zealand dollar, and the Euro.
The Greenback was the most turbulent currency of the observed period, as its portion of elevated volatility stood at 50%. Other currencies and the market as a whole, in turn, had their indexes above the historical level in only about 30% of the week. Nevertheless, with the exception of a few spikes, the overall level of dollar’s volatility was not high and did not exceed 1.3 mark. As for the components, USD/JPY was above the 1 point mark for 62% of the time, while the EUR/USD Volatility Index reached the period’s highest peak of 3.53.
The USD significance measure was holding a course of gradual growth since late September, and during the past week, with an impressive average of 0.72 points, was reporting the Greenback’s strongest influence, challenged only by the Kiwi’s gauge. The strengthening was observed across all USD/EUR components, as their distributions shifted closer to longer-term upper tails and averages notably exceeded historical levels. The tendency was especially pronounced in the pair’s combinations with USD/GBP, USD/AUD, and USD/NZD.
In the first half of this year the USA, along with the other developed regions of the world, suffered from painfully slow recovery, casting doubt over the ability of the world economy to stand on its own two feet this year without the crutches in the form of stimulus. But in the end the world’s largest economy also turned out to be the most successful among its peers. It was one of the few countries that seem to have preserved the positive momentum. As a result, the main topic of the past quarter was the appreciation of the US Dollar against the world currencies.
Japan, being a frequent guest of the headlines after failures to meet the expectations in the past, now cannot surprise to the upside, with the positive outlook hanging by a thread. In the meantime, the Euro zone overtook any other region in the number of disappointing figures. Neither inflation, nor the unemployment rate, which are within every central bank’s mandate to keep at healthy levels (apart from the main goal of price stability) are unwilling to move in the direction they are pushed. The half-year lag, which was observed between the business cycles in the USA and the Euro zone before, has widened and it continues to get only larger.
It has been argued that Draghi has delayed the European edition of the quantitative easing for far too long. But what if it does not work? Perhaps, he is already aware of that. What would you do in his place? I suppose we can agree that you would refuse to implement it. Simply not to disappoint, to keep the Europeans believing the ECB is in possession of a panacea that is ready to be used if the bloc is really in trouble.
And so, there are plenty of important questions left unanswered. Without them it is impossible to determine whether being optimistic right now is justified. But what other choice do we have? Let’s hope the last quarter of 2014 is going to give us the answers we seek and they will not turn out to be bitter.
The Pound’s performance throughout the past five trading days changed from time to time, as after the unexpected decline of October 14 CPI data, the base value for the currency plunged and the GBP Index fell below the baseline, even though it traded above it for the most of the period. The index posted a 0.91% weekly drop, subsequently limiting its four-week gain to minor 0.04%. Among other currencies only the Canadian Dollar showed worse development during the past week, as it declined 1.1%. On the other hand, the Japanese Yen, Swiss Franc and New Zealand Dollar advanced 1.4%, 0.76% and 0.67% in five trading days and reported the fastest weekly gain.
The period was quiet in terms of volatility, as the GBP elevated volatility index was below the market average levels. GBP/AUD was the only Pound’s cross with the portion of elevated volatility greater than market’s average of 35%, and with that posted the greatest elevated volatility index value of 40%. Meanwhile, unlike in the previous analyses, volatility of the GBP/NZD currency pair was not only much below the market average, but also the smallest among currency pairs included in the report.
Except some local changes to the upside and downside, the significance of the British Pound, calculated as an average correlation between different GBP crosses, stayed around the level of 0.30 during the reporting period. At the same time, on Wednesday and Tuesday the currency’s significance experienced some notable changes, while they were caused by some components dipping to weekly value of just above zero. However, lack of important news from Britain forced the average correlation to stay around the same level for the vast part of the period.
Euro was amongst the best performing currencies in the period. It came basically at par with the Swedish currency and the Kiwi and was surpassed only by the Japanese Yen and Swissy. However, all the other currency indices were outperformed by the Euro rather significantly, as they lagged at least 0.7% behind the Europe’s shared currency. Trough the period the Euro has showed very calm performance, as it fluctuated around the base for the first three days. However, on the second part of Wednesday the common currency started to gain slightly, after the Pound and the US Dollar were impacted to the down-side by the national data.
In the first part of the period the levels of volatility remained rather moderate. However, already starting from Tuesday the volatility in the market climbed significantly as the amount of important data increased. In the last three days of the period the EUR Volatility Index reached above the 2.0 mark. Moreover, On Thursday the gauge went even further and almost touched the 3.0 level, as the Canadian Manufacturing Sales disappointed. Also, US Unemployment Claims dropped to the lowest level in 14 years and US Industrial Production surprised to the upside. The US data were the most important news in the period.
The Euro significance measure remained moderate only for the first part of Friday and the last part of Thursday. The gauge started the period at 0.21 and ended it at 0.25, while the biggest changes were in-between the periods. At the end of Monday and at the beginning of Tuesday the measure exceeded the significance level of 0.4. Nonetheless, just slightly more than 24 hours later the significance level dropped below the 0.10 mark.
The USD Index remained on a general downtrend for the second week in a row, though it did not reach quite as far into the depreciation area as it did in the previous period. It also shifted from being the worst performer, holding above the pound’s and the Loonie’s gauges throughout the week. The dollar lost 1.35% of its value against its New Zealand counterpart, and around 1% against the Aussie and the Swiss franc. The Euro posted another weekly gain over the Greenback, adding 0.87% to the previous period’s 1% growth, as it seemed that for the time being the market stood on the Fed’s side in the race for the weaker currency.
After a rather turbulent previous week, the past period proved to be quite tranquil for the US dollar, and its volatility index was mostly driven by the USD/SEK, USD/CAD, and USD/JPY components. Thus, USD/SEK volatility surged up to the 4.7 points, but USD/JPY and USD/CAD reached 3.7 and 3.9 marks, respectively. Consequently, the Swedish krona became the past week’s most volatile currency in terms of its turbulence levels. Tuesday’s inflation rate release managed the SEK Volatility Index to jump to 4.39 points, and afterwards it held in the turbulent area till the end of the period. However, the yen exhibited the maximum portion of elevated volatility, as its index stayed above the historical level for about 73% of the time.
The USD significance measure was varying in a wide range of 0.22–0.8 points, pointing out the fact that a lot of influential news from various regions drove the market during the week. Correlations between USD/EUR and other USD pairs were mostly on average historical levels or below them, which reconfirmed the driving power of Greenback’s counterparts.
The Canadian dollar could certainly be considered one of the most active currencies of the October 15-21 time period. The CAD Index hovered below the baseline for the vast part of the week, however, it managed to gain value in the end of the week, namely 0.08%, if compared to the beginning of the period. The index showed a negative trend right from Wednesday until Tuesday’s morning, when it started to recover. Meanwhile, the currency rose against the majority of its observed peers, including USD and JPY by 0.77% and 0.52%, while it declined only against NZD and GBP by 0.91% and 0.59%, respectively.
The beginning of the analysed time period proved to be significantly more turbulent than last two days of it, still leaving the overall market volatility uplifted. Elevated volatility for the Canadian currency was located just above the market average at 49 versus 47 points, respectively. The CAD/JPY currency cross seemed to have the highest indicator of elevated volatility at 68 points, while the NZD/CAD pair was the least volatile. Concerning the volatility index, the highest average was posted by CAD/JPY at 1.41, with CAD/CHF following at 1.21 points.
The Canadian dollar’s correlations were on a rather high level throughout the period. Significance of the Canadian currency, calculated as an average correlation between different CAD crosses, was mixed with lots of ups and downs. Such strong movements were mostly caused by big portions of news both from Canada, Europe and US, as the significance index swung between 0.60 and 0.30 during different time periods. Among currency pairs, the highest correlation was observed with CAD/CHF cross during the period.
After holding above the baseline for the past two weeks, the EUR Index turned to weaken and ended the period with the greatest weekly loss since the beginning of October. In the long run, it came to be the second-worst performer, outpacing only the Swedish krona’s gauge on the half-yearly and yearly basis. The Euro depreciated against five of its eight observed peers, losing more than 1% versus the Canadian and the US dollars, and over 0.8% against the Aussie and the pound. Meanwhile, its strongest growth, achieved in EUR/JPY and EUR/NZD pairs, barely exceeded 0.4%.
In terms of elevated volatility portion the past period was the calmest one since mid-August, as the Euro became the second most turbulent currency with the gauge of only 25%. The levels of volatility indexes were also far from highest, and the single currency was in line with the majority of its observed peers in relation to both the maximum and the average values. EUR/CAD, EUR/GBP, and EUR/JPY posted the highest portions of elevated volatility, while the Loonie’s cross brought its index to the greatest peak. EUR/CHF was the calmest pair, with its volatility reaching above its historical average for only 7% of time.
The Euro currency significance measure held below its counterparts for the most of the period, but managed to reach its highest value since the rate cut in early September. Consequently, the component averages spiked higher than their long-term equivalents, even as most of the distributions were not unusual. The tightest bonds were observed in the EUR/USD combinations with EUR/GBP, EUR/JPY ,and EUR/CAD, while its average correlation with EUR/NZD came to be significantly positive for the first time since late June.
Tables have turned for the USD and the EUR Indexes, as they continued to hold on different sides of the baseline, but traded places in the appreciation/depreciation areas. After spending two weeks below the base value, the USD Index turned to uptrend and finished the period with a third-best result. The Greenback strengthened against six of its eight observed peers, posting the greatest weekly gains in pairs with the New Zealand dollar, the yen, and the Swedish krona. On the long-term basis, the index continued to report the highest yearly and half-yearly growth, while its monthly change dropped slightly below zero.
The week was marked by extremely low volatility levels. The portion of market’s elevated volatility was only 11%, while USD volatility was above its historical average in only 4% of time. Such low proportions of overturbulence allow the week to be considered the most tranquil one since the beginning of the year. As it is seen from the tables, the period’s most volatile currency was the Canadian dollar. Its Volatility Index reached the 4.47 value on Wednesday, against the background of the BoC rate decision report and the following press conference, when the market’s volatility also spiked to its week’s maximum. Thus, it became the most turbulent event of the period.
The US dollar’s significance was weakening for the second consecutive week, and mean correlations between EUR/USD and other USD pairs lost 0.12 – 0.41 points from their beginning of the month values. The decline was most noticeable in bonds with the Pacific currencies and the Loonie. The correlation distributions notably shifted down closer to their lower tails. Nevertheless, compared with the long-term values, mean correlations stayed on the same level, with some even gaining 0.01 – 0.06 points. The composite itself held around the 0.4 points level during the past week, losing about 0.3 points over the values reported two weeks ago.
The British currency traded in a rather calm environment during the October 22-29 time period, even though sometimes it managed to either gain strong value or decline considerably. Over the past five trading days the GDP Index added 0.28% and improved its monthly performance as well. However, it remains among one of the few currencies that lost value month-on-month, along with the Swedish krona, the US dollar, and the Loonie. Meanwhile, in a week’s time the pound grew significantly against Japanese and Swedish currencies, gaining 1.21% and 1.57%, respectively, while it lost the biggest value of 0.83% against the Aussie.
The period was mixed in terms of volatility, as some days of increased turbulence were changed by rather quiet periods for the currency. The portion of elevated GBP volatility was slightly above that of the market. GBP/CHF was the only pound’s cross with the parameter smaller than market’s average of 13%, and with that posted the lowest elevated volatility portion of 12%. However, it is explained by calm environment of all CHF-crosses. Among others, GBP/SEK and GBP/CAD posted the highest elevated volatility indicators during the period.
The significance of the British currency, calculated as an average correlation between different GBP crosses, was notably changing during all days of the reporting period. Except Thursday, when the correlation stayed around the 0.40 level throughout the whole day, the GBP composite swung between 0.25 and 0.70 points. Radical changes were caused by some components returning to weekly value of just above zero or falling below it. As a result, the week was finished with the average correlation of around 0.30, just slightly above the period’s lowest level.
The past week was very stable for the single European currency. Throughout the period the Euro Currency Index was, on average, at the 100.01 level, almost at the base value. The biggest deflection from the norm was on Tuesday, when the US durable goods orders surprised the market to the downside. Moreover, compared to the other currencies the Euro also was the most ‘peaceful’. On Thursday the Euro index was dragged lower by the disappointing inflation data from Germany; however, also this reaction was somewhat subdued.
In general, this has been a very calm week, the volatility has declined to even lower levels than we saw in the previous period. The elevated volatility of the Euro retreated to 12% from 25% last week, which already was the lowest reading seen since mid-August. The lowest elevated volatility was posted by EUR/JPY, EUR/GBP, EUR/CHF and EUR/CAD, for all of these pair’s the gauge was below 10% mark, which is very low. While the highest portion of elevated volatility was achieved by EUR/SEK, which was impacted by the Riksbank’s decision to cut the main interest rate to zero.
The past five-day period was interesting for its lack of positive or negative correlations. Especially, after the previous week, when EUR/USD correlated very strongly with various currency pairs (EUR/GBP, EUR/JPY, EUR/CAD). However, this week has been more about the negative correlations than the positive ones. From Tuesday to Thursday unprecedentedly strong negative correlation levels were observed in EUR/USD-EUR/CHF and EUR/USD-EUR/NZD combinations. Moreover, the lowest level was reached on Wednesday’s evening.
The week was marked with several significant movements of the currencies. In particular, SEK, USD, and JPY were reacting to domestic news most dramatically. Thus, the krona and the yen experienced the most considerable losses over the period – 0.86% and 3.2%, respectively. Moreover, the Swedish and the Japanese currencies turned out to be the only ones that finished the trading week with negative changes. As for the Greenback, it spent the first half of the week slightly below the baseline, but retrieved on Wednesday evening and finished the week on leading position, gaining 1.44% of its base value.
After an overly calm previous week, the US dollar turbulence rose slightly, and its portion of the elevated volatility grew from 4% to 18%. Nevertheless, the overall level of volatility was quite low, not only in pairs with the Greenback, but also in other currencies. Only the Swedish krona’s pairs were volatile for more than 30% of the observed period. The disturbances were caused by a host of the Swedish data releases on October 28 – 29. Despite rarity of the volatility peaks, maximum values of spikes were rather high. Thus, NZD/USD volatility surged to the 6.41 mark, while the maxima of the other USD indexes were holding in the range from 2.79 to 4.95 points.
The dollar’s significance measure strengthened slightly in the last week of October, with its values taking up a higher part of the historical distribution, and its minimum growing closer to the reference level of 0.30 points. The composite’s maximum stood less than 0.1 points short of the maximum possible value and was challenged only by the Swedish krona’s and the yen’s gauges. The distributions of most USD/EUR components also had lighter lower tails and lifted their average values above longer-term readings.
[ul]
[li]Intensifying blow of disinflation winds, with major world economies experiencing slowing inflation rate, never-ending streak of negative news from the Euro zone, slowing growth in China, the world’s second biggest economy, and recent volatility in financial markets seemed to be the main reasons behind experts’ gloomier outlook for the global economy in October. Both short and long term world’s economic sentiment indexes fell marginally from the previous month.
[/li][li]While the continental Europe continues to post uneven economic indicators, concerns are rising about health of the leading Euro area’s economies, including Germany and France, in the UK debates among Bank of England rate-setters get hotter, as they weigh when to start tightening cycle by raising interest rates amid rapidly improving economic conditions in the country. Nevertheless, upbeat news from Britain was not able to offset the effect which the Euro zone disappointing data had on academic experts. As a result, both sentiment indexes dropped in October.
[/li][li]In the US, economic performance is improving at a rapid pace, which is definitely beneficial for its neighbor Canada. The Fed has finally completed its six-year old quantitative easing programme despite the recent turbulence in financial markets as well as global economic woes. Professors’ faith in the North American region strengthened in the month of October, as both six-month and three-year sentiment indexes climbed.
[/li][li]Asia-Pacific saw its sentiment gauges falling in October, as China’s economy slows somewhat, Japan reaps the fruits of sales tax hike, central bankers in Australia and New Zealand monitor economic developments vigorously to understand the risk from falling commodity prices to the economy.
[/li][li]
[/li][/ul]
