VXX: Trading Volatility In January

Separately, the Federal Reserve will release its industrial production and capacity utilization figures for the month of December.

Finally, the Federal Reserve will issue its latest policy decision on January 18. While the US central bank is unlikely to raise rates in January, it could signal the pace and timing of further adjustments.

January 19: ECB Interest Rate Decision

In December, the ECB extended its bond-buying program for at least nine months, but said the size of those purchases would decline to €60 billion from €80 billion beginning in April[1] The smaller size of asset purchases raised concerns that the ECB was “tapering” its bond-buying program. Central bank President Mario Draghi may attempt to quell those fears at the January meeting, and his comments will have a direct impact on the markets.

January 20: Donald Trump Inauguration

On January 20, Donald Trump will be sworn in as United States President. The event will be closely followed by the financial markets, and will be accompanied by speculation about the new Republican administration’s economic policies. Trump has promised massive fiscal stimulus and even bigger corporate tax cuts, both of which have inspired massive rallies on Wall Street and pushed volatility to extremely low levels. Any doubts about Trump’s proposed plans could undermine the market’s recent upturn.

January 27: US Fourth Quarter GDP, US durable goods orders

The health of the US economy will be on display January 27 when the Commerce Department reports on fourth quarter gross domestic product (GDP). The US economy expanded at a faster 3.5% annualized pace in the third quarter.[2] While growth is not expected to be as robust in Q4, the economy likely ended the year on a high note.

Separately, the Commerce Department will report on December durable goods orders, an important measure of manufacturing demand.

All these events may trigger volatility in the financial markets, giving traders plenty of opportunity to capitalize on the VXX Fear Index. To keep track on all the latest market-moving events, be sure to follow the economic calendar.

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