(Chart courtesy of optionsHOUSE )
Energy is hitting new lows today, creating potential opportunities for other products that tend to follow.
CLF (Jan '16) Crude Oil futures fell more than $1 to trade below $39 for the first time in the history of the contract. Spot prices are testing levels from the summer, while its European Brent counterpart has already touched prices last seen at the depths of the March 2009 financial crisis.
The euro and gold are often correlated with oil, which may drive activity in associated futures contracts. Traders looking to short bullion, for instance, will make $100 for every $1 that GCCG (Feb '16) Gold Futures decline. 6EZ (Dec '15) Euro FX contracts, controls $1,250 every cent the euro moves against the U.S. dollar.
While weak demand and excess supply have weighed on oil, the euro and gold face headwinds from a potential rate hike by the U.S. Federal Reserve on Dec. 16.
That's because higher interest rates increase the appeal of the U.S. dollar against foreign currencies. And, a stronger greenback tends to hurt the notional value of metals against which it is priced.
For more information on futures, please visit The Futures Institute (Powered by CME Group) .
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