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USDJPY Collapsing Implied Volatility Could Signal Calm Before Storm

USDJPY Collapsing Implied Volatility Could Signal Calm Before Storm

2019-04-04 21:35:00
Rich Dvorak, Analyst


USDJPY overnight implied volatility has ticked up slightly from readings printed earlier this week likely in anticipation of tomorrow’s nonfarm payrolls and unemployment data expected out of the US. Implied volatility measures remain depressed across major forex pairs, however, as tempered markets have subdued price action resulting in muted expectations for future volatility.


Spot USDJPY Price Chart and Implied VolatilityForex Market Implied Volatility EUR, USD, GBP, JPY, CAD, AUD, NZD, CHFCurrency market implied volatility EURUSD, USDJPY, GBPUSD, USDCAD, AUDUSD, NZDUSD, USDCHF

The relatively low USDJPY implied volatility possibly suggests a snooze-fest for Friday's US jobs data with markets expecting the economic indicators to be reported in line with consensus. Alternatively, the lack of anticipated price action could indicate calm for now with a ‘volatility storm’ lurking on the horizon.


USDJPY Forex Economic Calendar

Visit the DailyFX Economic Calendar for a comprehensive list of upcoming economic events and data releases affecting the global markets.

Tomorrow’s economic data out of Japan and the US very well might serve as potential catalysts that spark a sizeable move in USDJPY spot prices – especially if NFP data surprises materially above or below estimates. Bloomberg median consensus for March’s NFP lists 170,000 as the headline jobs figure expected which compares to February’s reading of a mere 20,000 additions. That being said, check out the latest USDJPY technical analysis here for insight on potential key levels to keep an eye out for.


USDJPY Trader Sentiment Price Chart of Client Positioning

Check out IG’s Client Sentiment here for more detail on the bullish and bearish biases of EURUSD, GBPUSD, USDJPY, Gold, Bitcoin and S&P500.

According to IG client positioning data, USDJPY traders have aggressively increased their bearish bias: the number of traders net-short jumped 4.9 percent higher compared to yesterday while surging 47.0 percent higher relative to last week. The data also shows that 38.0 percent of traders are net long with the ratio of traders short to long at -1.63 to 1.


Whether you are a new or experienced trader, DailyFX has multiple resources available to help you: an indicator for monitoring trader sentiment; quarterly trading forecasts; analytical and educational webinars held daily; trading guides to help you improve trading performance, and even one for those who are new to FX trading.

- Written by Rich Dvorak, Junior Analyst for DailyFX

- Follow @RichDvorakFX on Twitter

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.