Strategy Video: Volatility as FOMC, ECB TLTRO, Scotland Referendum Approach
• FX Volatility has surged over the past few weeks - far more so than other asset classes
• Distinct changes in fundamental expectations (like the ECB stimulus) is part of it, as are expectations
• As major event risk in a FOMC meet, ECB TLTRO and Scottish Referendum approach, activity will further warp
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Volatility in the FX market has good reason to be as high as it is. We have seen significant changes in the standings of monetary policy, stability concerns arise like the Scottish referendum and of course large moves for the exchange rates themselves. Moving forward, known event risk looks as set to intensify with the likes of the Fed policy meeting (with updated forecasts), the ECB's first allotment of its targeted-LTRO program and Scotland's vote for independence on deck. These events are still a week away, but their influence is so significant that it can paradoxically curb trend ambitions or the potential for reversal. We discuss volatility heading into important event risk in today's Strategy Video.
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DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.