News & Analysis at your fingertips.

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. See our updated Privacy Policy here.

0

Notifications

Notifications below are based on filters which can be adjusted via Economic and Webinar Calendar pages.

Live Webinar

Live Webinar Events

0

Economic Calendar

Economic Calendar Events

0
Free Trading Guides
Subscribe
Please try again
EUR/USD
Bearish
Oil - US Crude
Bullish
Wall Street
Bearish
Gold
Bearish
GBP/USD
Bearish
USD/JPY
Bullish
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
More View more
Real Time News
  • Recessions can devastate the economy and disrupt the fortunes of individuals, businesses, and investors. But economic decline in the business cycle is inevitable, and your trading can be defined by how you respond to crisis. learn how to prepare here: https://t.co/e4CnobJCss https://t.co/3US2UaRckO
  • What is your forex trading style? Take the quiz and find out: https://t.co/YY3ePTpzSI https://t.co/z9XcfuxLOx
  • The ISM manufacturing index plays an important role in forex trading, with ISM data influencing currency prices globally. Find out about the recent history of ISM data, how to track it, and how to trade its release here: https://t.co/MZtBh88nOv https://t.co/hQgZB9T73q
  • The continuity seen across these volatility cycles is a good thing. Historical precedence offer a blueprint for identifying conditions supportive for a vol-event to occur, and how they may unfold. Deepen your knowledge of historical volatility here: https://t.co/vg7w10CKUR https://t.co/9JVh6BsWa2
  • There’s a strong correlation between interest rates and forex trading. Forex is ruled by many variables, but the interest rate of the currency is the fundamental factor that prevails above them all. Learn how interest rates impact currency markets here: https://t.co/J0EPMD2Cfi https://t.co/ZDuee58Abe
  • Many people are attracted to forex trading due to the amount of leverage that brokers provide. Leverage allows traders to gain more exposure in financial markets than what they are required to pay for. Learn about FX leverage here: https://t.co/BdgFmkRxVw https://t.co/niJL2W2yXV
  • GDP (Gross Domestic Product) economic data is deemed highly significant in the forex market. GDP figures are used as an indicator by fundamentalists to gauge the overall health and potential growth of a country. Learn use GDP data to your advantage here: https://t.co/Yl9vM7kO6a https://t.co/0rNbbrd58e
  • Traders utilize varying time frames to speculate in the forex market. The two most common are long- and short-term-time frames which transmits through to trend and trigger charts. Learn more about time-frame analysis here: https://t.co/9S5tXIs3SX https://t.co/zPzJAxBJxt
  • Emotions are often a key driving force behind FOMO. If left unchecked, they can lead traders to neglect trading plans and exceed comfortable levels of risk. Read on and get your emotions in check here: https://t.co/eILWbFgHRE https://t.co/uf6KEYTes5
  • There are three major forex trading sessions which comprise the 24-hour market: the London session, the US session and the Asian session. Learn about the characteristics of each session here: https://t.co/reRmDe1Ksp https://t.co/gRjdVfbg66
Currency Market Volatility Surges on Trump Tariffs, AUD Eyes RBA

Currency Market Volatility Surges on Trump Tariffs, AUD Eyes RBA

Rich Dvorak, Analyst

CURRENCY VOLATILITY – TALKING POINTS:

Over the weekend, US President Donald Trump shocked markets with a tweet that stated tariffs on $200 Billion of Chinese goods will be raised from 10 percent to 25 percent this Friday. The remarks are said to be in response to US trade negotiators voicing concern that China showing signs of walking back on a possible trade deal.

The blindsiding escalation came as a surprise considering several headlines from the White House proclaiming that US-China trade talks were “going well” with plans for Chinese Vice Premier Liu He to travel to Washington, DC this week for the eleventh round of negotiations. In response to this latest jolt of uncertainty, traders began to sell risk and flock into ‘safe-havens’ while bidding up volatility.

DXY US DOLLAR INDEX 1-WEEK IMPLIED VOLATILITY PRICE CHART: DAILY TIME FRAME (JANUARY 01, 2019 TO MAY 06, 2019)

DXY US Dollar Implied Volatility Price Chart

Consequently, the DXY US Dollar Index 1-week implied volatility measure surged to 5.95 percent as the gauge continues to show signs that forex market volatility could be rebounding off recent lows. Price action in the Chinese Yuan also ticked higher with USDCNH jumping the most since 2015 when the CNY was devalued.

FOREX MARKET IMPLIED VOLATILITY AND TRADING RANGES

Currency Market Volatility Surges on Trump Tariffs, AUD Eyes RBA Currency Market Volatility Surges on Trump Tariffs, AUD Eyes RBA

Meanwhile, with the Reserve Bank of Australia on deck to announce its latest interest rate decision, AUDUSD is expected to be the most active currency pair over the next 24-hours with an implied volatility of 21.16 percent which is its highest reading since June 2016. As such, forex traders might expect the Aussie to trade between 0.6913 and 0.7067 with a 68 percent statistical probability.

AUDUSD PRICE CHART: DAILY TIME FRAME (DECEMBER 18, 2018 TO MAY 06, 2019)

AUDUSD Price Chart Implied Volatility before May 2019 RBA meeting

Since the RBA released its March meeting minutes, rate cut bets have accumulated and contributed to the sizable move lower in AUDUSD. Now, overnight indexed swaps are pricing a 46 percent chance that the RBA lowers its overnight cash rate by 25 basis points at tomorrow’s meeting.

If the RBA does in fact cut rates, AUDUSD could potentially target the 0.6900 price level – particularly if trade uncertainty is cited by the central bank as a contributing factor to its decision. Conversely, a firm yet cautious tone from the RBA where the central bank stands pat on rates could bolster the Australian Dollar. Although, upside may be limited by downtrend resistance or further dovishness conveyed by the RBA despite if it leaves rates unchanged.

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