Never miss a story from Rich Dvorak

Subscribe to receive daily updates on publications
Please enter valid First Name
Please fill out this field.
Please enter valid Last Name
Please fill out this field.
Please enter valid email
Please fill out this field.
Please select a country

I’d like to receive information from DailyFX and IG about trading opportunities and their products and services via email.

Please fill out this field.

Your Forecast Is Headed to Your Inbox

But don't just read our analysis - put it to the rest. Your forecast comes with a free demo account from our provider, IG, so you can try out trading with zero risk.

Your demo is preloaded with £10,000 virtual funds, which you can use to trade over 10,000 live global markets.

We'll email you login details shortly.

Learn More about Your Demo

You are subscribed to Rich Dvorak

You can manage your subscriptions by following the link in the footer of each email you will receive

An error occurred submitting your form.
Please try again later.

TALKING POINTS:

Awareness of implied volatility aids forex traders in predicting the possible magnitude of spot price movements. Expected volatility can be used to calculate trading ranges that provides an estimate for how high or low a currency might move over the given period which is useful for hedging and setting effective limit orders. So what is the forex option market expecting next week for NZDUSD, AUDUSD, USDCAD, USDCHF, USDJPY, GBPUSD and EURUSD?

FOREX MARKET IMPLIED VOLATILITY AND TRADING RANGES

Currency Market Implied Volatility: Week AheadCurrency Market Implied Volatility: Week Ahead

The drawdown in 1-week implied volatilities over the last few trading days could be signaling a ‘calm before the storm.’ Weak economic data that has been crossing the wires as of late could eventually turn sentiment and quickly accelerate price action. This generally causes volatility to spike.

UPCOMING AUDUSD, USDCAD ECONOMIC DATA AND EVENT RISK

Currency Market Implied Volatility: Week Ahead

Want to see a comprehensive list of economic data releases and event risk? Check out the free DailyFX Economic Calendar updated in real-time!

AUDUSD looks ripe for some price action on Tuesday with the Reserve Bank of Australia interest rate decisionand Governor Lowe’s follow-up speech. Although markets are widely expecting the RBA to keep the cash target rate on hold at 1.5 percent, the central bank’s leader may provide insight on the future direction of Australia’s monetary policy. The ISM Services Index could also impact the currency pair if the reading warrants a reaction in the USD which follows a disappointing report on the manufacturing sector released earlier today.

Additionally, USDCAD could see some sizeable swings with the Bank of Canada slated to announce any changes in its interest rate outlook with the accommodating press release providing a check-up on the country’s economy. Friday could also bring about some volatility for USDCAD traders with employment data out of the two countries on deck for release.

---

Written by Rich Dvorak, Junior Analyst for DailyFX

Follow on Twitter @RichDvorakFX

Check out our Education Center for more information on Currency Forecasts and Trading Guides.

https://twitter.com/RichDvorakFX