We use a range of cookies to give you the best possible browsing experience. By continuing to use this website, you agree to our use of cookies.
You can learn more about our cookie policy here, or by following the link at the bottom of any page on our site.

Free Trading Guides
EUR/USD
Bearish
GBP/USD
Mixed
USD/JPY
Bearish
Low
High
of clients are net long.
of clients are net short.
Long Short

Note: Low and High figures are for the trading day.

Data provided by
Gold
Bullish
Oil - US Crude
Bearish
Bitcoin
Bearish
More View more
Real Time News
  • The AUD has been hit by the risk-appetite pullback occasioned by the spread of Wuhan-strain coronavirus. This week may see domestic focus return, if headlines allow, with key inflation data due. Get your $AUDUSD market update from @DavidCottleFX here: https://t.co/UIpwno0pSq https://t.co/kib4d1mA0q
  • RT @anilvohra69: USD inverted (red) is correlated to Excess Reserves (blue) and Reserve Balances (green). 1/2 https://t.co/bbO1pPWY4F
  • RT @FactSet: $SPX is reporting a decline in earnings of -1.9% for Q4, led by the Energy (-42%), Consumer Discretionary (-14%), and Material…
  • Becoming a forex trader means living and breathing the excitement, risk and reward of trading in the biggest and most liquid market in the world. Do you have what it takes? Read here to discover the qualities and processes it takes to build consistency: https://t.co/EfWEACQ6Cz https://t.co/6iMyDFqnqe
  • Knowing how to accurately value a #stock enables traders to identify and take advantage of opportunities in the stock market. Find out the difference between a stock's market and intrinsic value, and the importance of the two here: https://t.co/QszmdZFxlk https://t.co/2mjzvYvgSn
  • Previewing the Texas Rangers new home! https://t.co/WITZGSQPlc
  • Thanks for having me on @MartinSEssex https://t.co/fg8uOe16wr
  • The MACD is often used with its default setting when entering trades. However, this versatile indicator can be customized to assist traders in exiting trades too. Learn how to better incorporate the MACD into your trading strategy here: https://t.co/HnY7gzsI2q https://t.co/5F1DSvAXyy
  • What are some factors affecting $GBP as we head into 2020, quarter one? Download your Sterling fundamental forecast with @nickcawley1 here to find out: https://t.co/YfDSYSATK9 https://t.co/ANFLIuDY4J
  • Trading Global Markets new #podcast features @DailyFX Anlayst @PeterHanksFX , who discusses what assets would benefit in the next #recession. Tune into this new podcast episode hosted by @MartinSEssex here: https://t.co/Twr44cZ1GB https://t.co/llKzvZGDpQ
Currency Volatility: What Does AUDJPY Price Action Suggest for Risk Assets?

Currency Volatility: What Does AUDJPY Price Action Suggest for Risk Assets?

2019-04-12 20:00:00
Rich Dvorak, Junior Analyst
Share:

AUDJPY IMPLIED VOLATILITY – TALKING POINTS

The Australian Dollar has appreciated meaningfully against the Japanese Yen so far this year as recovering market sentiment and cratering volatility have supported ‘risky’ currencies such as the Kiwi relative to ‘safe-haven’ counterparts like the Yen.

In fact, AUDJPY has inked year-to-date spot returns in excess of 5 percent while the currency pair’s 1-week implied volatility has dropped from 16 percent to 7 percent at the same time.

AUDJPY IMPLIED VOLATILITY PRICE CHART: DAILY TIME FRAME (OCTOBER 01, 2018 TO APRIL 12, 2019)

AUDJPY Price Chart Implied Currency Volatility

Moreover, AUDJPY 1-month implied volatility now sits at its lowest level in over a year. Aussie-Yen implied volatility has been on a steady decline since the Japanese Yen Flash Crash back in early January.

Subsequent to this event, AUDJPY has mirrored the rise in global equities with investor concerns over the slowing global growth getting pushed to the back seat following dovish monetary policy from central banks around the world aiming to restore market confidence. The Kiwi also received positive attention as the US-China Trade War progressively deescalated.

FOREX MARKET IMPLIED VOLATILITIES AND TRADING RANGES

Forex Market Implied VolatilityCurrency Market Implied Volatility

Collapsing currency market implied volatility is not isolated to AUDJPY and has impacted several major currency pairs. While forex traders typically fiend for market volatility, the lack thereof has increased the relative attractiveness for currency carry trades.

Consequently, the demand for traders to go long high-yielding currencies like the Australian Dollar and take a short position on low-yielding currencies like the Japanese Yen has likely contributed to the strong advance of AUDJPY.

Furthermore, the Deutsche Bank G10 Currency Carry Trade Index has gained roughly 4 percent so far this year which outperforms spot returns across the major currency pairs. If volatility across markets continues to fall, the carry trade and risk assets could keep rising as a result.

AUDJPY TRADER CLIENT SENTIMENT

Australian Dollar Japanese Yen Price Chart Trader Sentiment 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.

TRADING RESOURCES

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.

DISCLOSURES

News & Analysis at your fingertips.