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.

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
EUR/USD
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
Oil - US Crude
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
Wall Street
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
GBP/USD
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
USD/JPY
Mixed
More View more
Real Time News
  • Fed Chair Powell says the municipal finance market is working pretty well
  • GBP/USD will likely extend its recent slide caused principally by a stronger US Dollar. Get your $GBPUSD market update from @MartinSEssex here:https://t.co/izio6AVcFX https://t.co/HCGK3NEW8N
  • Forex Update: As of 14:00, these are your best and worst performers based on the London trading schedule: 🇬🇧GBP: 0.02% 🇯🇵JPY: -0.07% 🇨🇦CAD: -0.07% 🇨🇭CHF: -0.32% 🇳🇿NZD: -0.38% 🇦🇺AUD: -0.67% View the performance of all markets via https://www.dailyfx.com/forex-rates#currencies https://t.co/pv6tWdcxqU
  • Indices Update: As of 14:00, these are your best and worst performers based on the London trading schedule: US 500: -0.34% Wall Street: -0.40% Germany 30: -0.85% France 40: -1.31% FTSE 100: -1.70% View the performance of all markets via https://www.dailyfx.com/forex-rates#indices https://t.co/m31LiWOqsh
  • Heads Up:🇩🇪 Bundesbank Wuermeling Speech due at 15:00 GMT (15min) https://www.dailyfx.com/economic-calendar#2020-09-24
  • what a move in $AUDUSD this week Rising wedge reversal filled in, price action driving towards .7000. So much selling so fast, may need a break before it can take out the big fig https://t.co/RSLLc97o7G https://t.co/XGAkj157hh
  • BoE Governor Bailey says the BoE should have negative rates in toolbox because other countries have demonstrated they can do it
  • BOE Governor Bailey says we have to look at how negative rates will affect the financial system - BBG
  • Commodities Update: As of 14:00, these are your best and worst performers based on the London trading schedule: Oil - US Crude: 0.32% Gold: -0.19% Silver: -1.42% View the performance of all markets via https://www.dailyfx.com/forex-rates#commodities https://t.co/Fi1j0nSeXP
  • 🇺🇸 New Home Sales MoM (AUG) Actual: 4.8% Expected: -0.1% Previous: 14.7% https://www.dailyfx.com/economic-calendar#2020-09-24
Most Volatile Currencies Next Week - GBP/USD, NZD/USD

Most Volatile Currencies Next Week - GBP/USD, NZD/USD

2019-07-12 10:35:00
Justin McQueen, Analyst
Share:

Currency VolatilityGBPUSD, NZDUSD Talking Points

  • Risk of Market Complacency as FX Volatility Hovers Around 5yr Lows
  • GBPUSD & NZDUSD expected to be the most volatile currencies next week

Top 10 most volatile currency pairs and how to trade them

1W Implied Volatility

Most Volatile Currencies Next Week - GBP/USD, NZD/USD

Source: Thomson Reuters, DailyFX

*Through calculating the 1-standard deviation estimated range, this suggests that there is a 68% statistical probability that these pairs will trade within this range.

Risk of Market Complacency as FX Volatility Hovers Around 5yr Lows

The trend of declining volatility across FX markets has shown little signs of reversing, given that our G7 currency 1-month implied volatility index is hovering near the lowest level since 2014. One of the reasons we see behind the move has been due to the subdued nature of equity market volatility (full analysis). Elsewhere, the well-telegraphed communication that central bank easing will be on the way, particularly from the Federal Reserve and ECB has also contributed to putting a lid FX market volatility. However, given the deteriorating outlook regarding the global economy, with implied volatility nearing 2014 lows, there is a risk that the market could be somewhat complacent and thus there is a vulnerability to a spike in volatility.

Currency Volatility Index

Most Volatile Currencies Next Week

Most Volatile Currencies Next Week - GBP/USD, NZD/USD

Source: Thomson Reuters, DailyFX

NZD: The New Zealand Dollar is expected to be the most volatile currency over the course of next week with 1-week implied vols at 6.8. However, with that said, implied volatility in NZDUSD is only 0.9vols off the 2019 low.

For Kiwi traders’ eyes will be on the NZ inflation report (15th July) for the second quarter, where expectations are for a slight lift to 1.7% from 1.5%, alongside this, the RBNZ’s preferred measure of inflation (sectoral factor) will also be released, as such, this will be key as to whether there is increased scope for further monetary easing from the central bank in the near term. As it stands, money markets have attached at 72% chance of a 25bps rate cut at the August.

Elsewhere, focus will be on the latest Q2 growth figures from China, whereby the headline figure is seen dropping to 6.2%, which would mark the worst quarterly rate of growth for China in roughly 30yrs. Although, while this would be within the Chinese governments target range of 6-6.5% growth, this will continue to raise concerns over the health of the global economy, thus keeping gains in high beta currencies (AUD, NZD) contained.

NZDUSD 1-week ATM break-evens imply a move of 56pips(meaning that option traders need to see a move of at least 56pips in either direction in order to realise gains). Risk reversals are neutral at -0.025, suggesting that the pair could remain rangebound, however, there is a risk that implied vols are under-pricing the risk of next weeks events given that realised volatility (fair value) has been notably higher at 9.04vols than implied volatility 6.8vols.

GBP: A raft of tier 1 data from the UK is due to be released, in the form of employment, inflation and retail sales figures, althought, while GBP implied vols are higher than the majority of its G10 counterparts, 1-week tenors are only 0.5vols above the YTD low. GBPUSD 1-week ATM break-evens imply a move of 85pips. Given that UK data is largely on the sidelines wth Brexit the main focal for GBP. US data may play a more important role in influence GBPUSD amid the influence that it will have on Fed monetary policy going forward, thus eyes will be situated on the US retail sales report.

Most Volatile Currencies Next Week - GBP/USD, NZD/USD

For a more in-depth analysis on FX, check out the Q3 FX Forecast

--- Written by Justin McQueen, Market Analyst

To contact Justin, email him at Justin.mcqueen@ig.com

Follow Justin on Twitter @JMcQueenFX

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

DISCLOSURES