Disclaimer: CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage.
You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.
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CAC 40
The benchmark equity index of the Paris stock exchange comprising of the 40 largest and most liquid French companies by free float market cap. The name is an acronym for Cotation Assistée en Continu, continuous assisted quotation, referring to the computerised trading system introduced when the index was created in 1987. It’s the key gauge of French, and by extension, broader eurozone, equity market sentiment.
The CAC 40 has a higher international exposure than many national indices. The brands that make it up, including LVMH, TotalEnergies, Airbus, Sanofi, BNP Paribas, generate most of their revenues outside France. This is why the index is sensitive to global growth conditions, the euro exchange rate, and commodity prices, sometimes even more so than to French domestic economic data.
Futures and options on the CAC 40 are extremely active on Euronext. It is a widely used benchmark for managers of European equity funds and a popular underlying for structured products sold to French retail investors.
Example: At the end of 2023, LVMH, which at peak weighting accounted for over 10% of the CAC 40, reported slowing Chinese luxury demand, and the whole index fell materially. The French national benchmark moved on exposure to China by one company. That’s the concentration risk in an index of forty names, weighted by market capitalization.
CAD
ISO 4217 currency code for the Canadian dollar. The currency is also known in FX markets as the loonie, after the common loon bird on the one-dollar coin. The pair USD/CAD is the standard quote. Unlike most major pairs where the dollar is second, here it’s first. So a rising USD/CAD rate means a weaker Loonie.
CAD is a commodity currency in the classic sense of the word. Canada is one of the world’s largest oil exporters, and there is a well-documented, persistent correlation between crude prices and the Canadian dollar. The loonie usually makes gains when oil rallies. CAD sells off hard and fast when energy prices collapse, as in 2015 and 2020.
Example: In early 2016, when West Texas Intermediate crude briefly dropped to $26 a barrel, USD/CAD broke above 1.46, meaning each U.S. dollar bought almost 1.5 Canadian dollars. With oil prices rebounding, the pair slowly climbed back to 1.25 during 2017 and 2018. Those oil traders who ignored the FX part left serious money on the table.
Caixin Manufacturing PMI
China’s manufacturing activity index indicator based on monthly surveys compiled by financial data provider Caixin in conjunction with S&P Global. It surveys purchasing managers at several hundred mostly private, export-oriented companies, asking whether conditions, output, new orders, employment, inventories, and supplier delivery times improved, worsened, or stayed the same compared with the previous month. A reading above 50 means expansion, and a reading below 50 means contraction.
The Caixin PMI is different from the official NBS Manufacturing PMI, which has a larger sample skewed toward state-owned enterprises. Caixin’s panel is skewed toward private and export-oriented manufacturers, so it often diverges from the official print and is viewed as a more sensitive gauge of the health of China’s globally integrated industrial base. The part that matters most to commodity markets and global supply chains.
The release typically moves Asian equity markets, the Australian dollar (as a China proxy), copper prices, and iron ore futures within minutes of release.
Example: The post-COVID reopening of China is creating real industrial momentum, as demonstrated by the Caixin Manufacturing PMI rising to a month’s high of 51.6 in February 2023. Copper rallied, and the AUD strengthened, and mining stocks outperformed globally in the days following the release. on.
Caixin Services PMI
The Caixin Manufacturing PMI companion measures activity in the services sector in China in the finance, retail, hospitality, transport, healthcare, and professional services. Same methodology: survey purchasing managers at private service-sector firms, aggregate their responses into a diffusion index, and publish monthly. Above 50 is expansion. Below 50 is contraction.
The services PMI has become more important as China’s economy shifts from export and investment-led growth to one of domestic consumption. A strong Caixin Services reading is a sign that Chinese households are spending, at restaurants, on travel, and in retail, which matters for a different set of global assets than the manufacturing print. Consumer discretionary stocks, tourism-exposed equities, and Asian currencies appear to be more sensitive to the services number.
Caixin Manufacturing and Services are merged into a Caixin Composite PMI, offering one read on the entire economy. That composite is what most macro desks look to for a headline snapshot of China activity.
Example: The Caixin Services PMI dropped to 51.8 in August 2023. Still, it was expansionary, but the weakest reading since the post-COVID reopening. Markets took this as evidence that the consumer-led recovery was faltering faster than expected. Chinese equities sold off, and the yuan came under renewed pressure in the same sessi
Call option
A contract that gives the buyer the right, but not the obligation, to purchase an underlying asset at a predetermined price (the strike) on or before a specified expiry date. The buyer pays a premium up front for this right. The seller gets the premium and is obligated to sell if the buyer exercises.
The point is the asymmetry. The most the buyer can lose is the premium. The upside is theoretically unlimited; the higher the underlying goes over the strike, the more the call is worth. Calls are bullish instruments bought when you expect a price to rise, but don’t want to take on full exposure to the position.
Calls are used to speculate, to generate income (covered calls against existing holdings), and to hedge portfolios. The price of a call is a function of five variables: the spot price, the strike, the time to expiry, the implied volatility, and the risk-free rate. The most hotly debated by traders is implied volatility.
Example: Suppose a trader buys a one-month call on Tata Motors, struck at ₹900, with a premium of ₹30, when the stock is at ₹870. If the stock closes at ₹950 at expiry, the option has an intrinsic value of ₹50. The less the premium, the more profit you make of ₹20. If the stock closes at ₹880, the option becomes worthless, and the trader loses only the ₹30 paid. That’s the floor.
Camarilla Pivot Points
A set of intraday support and resistance levels developed by bond trader Nick Scott in 1989 from the high, low, and close of the previous session. The Camarilla method produces eight levels, four resistance levels ( R1 through R4 ) and four support levels ( S1 through S4 ). The Camarilla method uses a proprietary multiplier that brings the levels closer together than classical pivot calculations, based on the observation by Scott that markets have a strong tendency to revert to the prior close.
In practice, the key levels are R3, R4, S3, and S4. The theory is that in regular sessions, price generally oscillates between S3 and R3, making those levels useful for mean-reversion entries. If price breaks above R4 or below S4, then the model assumes that it’s a real breakout, and the momentum will follow through. It’s a signal to trade in the direction of the breakout and not to fade it.
Camarilla pivots are popular with short-term Intraday traders and scalpers of liquid futures and forex pairs.
Example: A day trader of EUR/USD calculates Camarilla levels every morning from the previous session’s data. Price opens near the midpoint, drifts toward S3. The trader buys, looking for a reversion to the previous close. Price obliges, making their way through the mid-level by noon. The trade closes before the US session opens. Camarilla textbook mean-reversion mechanics.
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