USDJPY Collapsing Implied Volatility Could Signal Calm Before Storm
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USDJPY IMPLIED VOLATILITY – TALKING POINTS
- USDJPY implied volatility remains tame despite high-impact event risk from US nonfarm payroll data slated for release tomorrow
- Currency traders could send USDJPY swinging if US employment data largely misses expectations again, echoing February’s bleak report, or beats by a wide margin
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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.
FOREX MARKET IMPLIED VOLATILITIES AND TRADING RANGES
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.
FOREX ECONOMIC CALENDAR – USDJPY
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 CLIENT SENTIMENT
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.
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- Written by Rich Dvorak, Junior Analyst for DailyFX
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DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.