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USDCAD, NZDUSD Options Vol Rises Ahead of Poloz Speech, RBNZ

USDCAD, NZDUSD Options Vol Rises Ahead of Poloz Speech, RBNZ

Paul Robinson, Strategist

What’s inside:

  • BoC Governor Stephen Poloz speech at 15:45 GMT, USDCAD one-day IV at 14.81%
  • RBNZ rate decision at 20:00, NZDUSD one-day IV rises to 17.54%
  • Projected range highs/lows for both impacted pairs

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In the following table, you’ll find implied volatility (IV) levels for major USD-pairs looking out over the next one-day and one-week time-frames. Using these levels, we’ve derived the range-low/high prices from the current spot price within one-standard deviation for specified periods. Statistically speaking, there is a 68% probability that price will remain within the lower and upper-bounds.

USDCAD one-day implied volatility rises to 14.81% ahead of Poloz speech

At 15:45 GMT time, BoC Governor Stephen Poloz will be giving a speech, which has very short-term implied volatility on the rise. At a one-day IV level of 14.81% the projected 1-stdev range from the current spot price is 12295-12487. Currently USDCAD is pressed up against a slope running down from June, but more importantly it is testing the underside of the broken 2012 trend-line. This presents a formidable area of resistance as a key event nears. It seems likely we would need a fairly dovish tone out of Poloz to push through this staunch area of resistance and to exceed the projected one-day high. If we do see a strong lift, the shorter-term trend-line off the 8/15 peak is in near alignment with the projected one-day high. Looking lower, there isn’t any confluence between the projected low and price levels, but if USDCAD is to find rejection at resistance we could see the projected low seen in today’s session.

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USDCAD: Daily

NZDUSD one-day implied volatility is currently at 17.54% ahead of today’s RBNZ rate decision

Later today, at 20:00 the RBNZ will decide on rates, with the central bank expected to keep its benchmark rate at 1.75%. The focus will likely be on the tone of the RBNZ and its new governor, Grant Spencer. Heading into this meeting, one-day implied volatility is a bit higher than it was going into the August meeting, which indicates an expectation for more volatility on today’s events. In August one-day IV was at 14.25% versus 17.54% today. Although, in recent trade implied volatility has been elevated on the back of some wild price action, so the current level isn't particularly high relative to recent history.

The projected range-low is 7137, which is of interest given the proximity to key price support going back to February and more recently on the final day of August. Additionally, the 200-day MA is only a handful of pips above price support. The projected low may very well hold as buyers step in at a fairly substantial level of support. Looking higher, nothing of interest particularly sticks out as resistance near the projected high of 7269.

For other currency volatility-related articles please visit the Binaries page.

NZDUSD: Daily

---Written by Paul Robinson, Market Analyst

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

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