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Canadian Dollar Expected to be Most Volatile Currency Amid BoC & Fed Risk

Canadian Dollar Expected to be Most Volatile Currency Amid BoC & Fed Risk

Justin McQueen, Strategist

Currency Volatility CAD Talking Points

  • CAD Expected to be the Most Volatile Currency
  • BoC, Fed Powell & Minutes Spark CAD Volatility

Top 10 most volatile currency pairs and how to trade them

For a more in-depth analysis on FX, check out the Q2 FX Forecast

CAD Expected to be the Most Volatile Currency

USDCAD | Across the G10 complex overnight implied volatility has jumped with eyes on Fed Chair Powell’s testimony, while FOMC minutes are also released. However, today’s most volatile currency is expected to be the Canadian Dollar given that there will also be the release of the Bank of Canada’s monetary policy report. USDCAD vols have surged 6.950 vols to 13.075, which is the highest of 2019. This implies that USDCAD ATM break-evens = 72pips (meaning that option traders need to see a move of at least 72pip in either direction in order to realise gains). Risk reversals are relatively neutral at 0.2, suggesting that while this shows a slight topside bias, price action is likely to be contained. Resistance is situated at 1.3145 and 1.3200, while on the downside support is seen at 1.3040-50.

USDCAD Price Chart: Daily Time Frame (Oct 2018July2019)

--- Written by Justin McQueen, Market Analyst

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