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
Mixed
Oil - US Crude
Mixed
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
Mixed
Gold
Bullish
GBP/USD
Bullish
USD/JPY
Bullish
More View more
Real Time News
  • Since mid-June USD/CAD has consolidated in a well-defined zone. Will today’s Fed members speeches (14:00- 18:00 and 19:00 UK) push the pair in a clear direction? #USDCAD, #USD, #Fed https://t.co/SxjnwNupP2
  • Join @MartinSEssex 's #webinar at 6:30 AM ET/10:30 AM GMT to learn more about trading #sentiment Register here: https://t.co/XUUPRdY06p https://t.co/KsjQit31hK
  • Have you been catching on your @DailyFX podcast "Global Markets Decoded"? Catch up on them now, before new episodes release! https://t.co/Twr44cZ1GB https://t.co/Qe7aw1a6UU
  • Crude Oil Prices May Turn Lower as Covid-19 Fears Reemerge - https://www.dailyfx.com/forex/fundamental/daily_briefing/daily_pieces/commodities/2020/07/07/Crude-Oil-Prices-May-Turn-Lower-as-Covid-19-Fears-Reemerge.html?CHID=9&QPID=917708&utm_source=Twitter&utm_medium=Spivak&utm_campaign=twr #CrudeOil #oott #COVID19
  • Forex trading, which is the act of exchanging fiat currencies, is thought to be centuries old – dating back to the Babylonian period. Learn about the history of Forex here:https://t.co/ePTJlbUP7c https://t.co/bdDrVU9XED
  • 🇮🇹 Retail Sales MoM (MAY) Actual: 25.2% Previous: -10.5% https://www.dailyfx.com/economic-calendar#2020-07-07
  • Chinese gold reserves $110.76bln at the end of June from $108.29bln at the end of May, according to the PBoC
  • EU Commission - Euro Area GDP 2020 forecast at -8.7% (-7.7% previous) - 2021 GDP forecast at 6.1% (6.3% previous)
  • 🇮🇹 Retail Sales MoM (MAY) Actual: 25.2 Previous: -10.5% https://www.dailyfx.com/economic-calendar#2020-07-07
  • IG Client Sentiment Update: Our data shows the vast majority of traders in Ripple are long at 97.38%, while traders in US 500 are at opposite extremes with 71.32%. See the summary chart below and full details and charts on DailyFX: https://www.dailyfx.com/sentiment https://t.co/tjZNp13KdF
USD/CAD, AUD/USD Volatility Soars on Federal Reserve Rate Decision Risk

USD/CAD, AUD/USD Volatility Soars on Federal Reserve Rate Decision Risk

2019-09-18 08:00:00
Justin McQueen, Analyst
Share:

Currency Volatility AUD/USD, USD/CAD Talking Points

  • G10 FX Volatility Surges on Fed Day
  • AUD/USD Implied Volatility Highest in G10 amid Fed and Jobs data
  • Fed Expected to Cut Rates, Eyes on Talk of Open Market Operations Amid Liquidity Squeeze

Top 10 most volatile currency pairs and how to trade them

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

USD/CAD, AUD/USD Volatility Soars on Federal Reserve Rate Decision Risk

Most Volatile Currencies on Fed Day

AUD/USD | Daily Range 0.6785-0.6885

Overnight AUD/USD implied volatility has surged to its highest level since May as focus turns to the Federal Reserve rate decision, alongside the Australian jobs market report. Implied vols have added nearly 10 vols in risk premium to 15.95, which in turn means that AUD/USD ATM break-even straddles = 46pips(essentially, for option traders to realise gains, the spot price must see a move greater than 80pips).

Australian Labour Market

The importance of the labour market data has grown since the release of the dovish RBA minutes at the beginning of the week, which has seen rate expectations of a 25bps to 0.75% rise from 27% to 46%. Consequently, a rate cut at the October meeting could be somewhat of a material risk amid a weaker than expected labour market report.

USD/CAD | Daily Range 1.3190-1.3330

Overnight USD/CAD implied volatility has gained 5.35 vols to 12.55, marking its highest level since January. In light of the recent volatility across the oil complex, notable risk premium has been added to oil-sensitive currencies, in particular the Canadian Dollar. As such, the USD/CAD ATM break-even straddle = 69pips. Prior to the FOMC meeting, CAD traders will be placing a watchful eye on the latest inflation report, which in recent months have been holding relatively steady at the BoC’s target. As the BoC’s preferred inflation metric holding at the 2% target, it would take a notable deviation to prompt a rethink in the central banks neutral outlook.

Fed Monetary Policy Decision

The Federal Reserve monetary policy decision is scheduled for 19:00BST, where expectations are for the Fed to lower the fed funds rate by 25bps to 1.75-2.00% with two hawkish dissenters (George & Rosengren). However, with a cut largely priced in, eyes are on the outlook with regard to monetary policy and whether the central bank will leave the door open to further interest rate cuts. As a reminder, the latest staff economic projections are due to be released, in which the dot plot projections are likely to be guided lower in order to reflect the recent rate cuts.

Key Fed Commentary

USD/CAD, AUD/USD Volatility Soars on Federal Reserve Rate Decision Risk

Current Fed Staff Economic Projections

USD/CAD, AUD/USD Volatility Soars on Federal Reserve Rate Decision Risk

--- 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

News & Analysis at your fingertips.