FX Daily: Low volatility prevails
USD: Realised volatility sinks Perhaps unsurprisingly, realised FX volatility is sinking in mid-August. The main risk event on the horizon is the Fed’s policy meeting on 16 September, where the market prices exactly a 50% chance of a 25bp hike. Whether the Fed hikes or not will be determined by a few data points ahead ...
Realised FX volatility is declining in mid-August, with the Federal Reserve's policy meeting on September 16th serving as the primary risk event. The market prices a 50% chance of a quarter-point increase, despite the outcome depending on specific data points prior to the meeting. Investors remain unconcerned about the upcoming meeting, focusing on carrying high-yielding currencies instead.
The Norwegian krone has led the G10 in total returns this quarter, while three Latin American currencies rank among the top four performers in emerging markets. The bond market remains a potential threat, with longer-dated US Treasury yields reaching recent highs and Nvidia partnering with six investment houses to arrange $500 billion in debt financing.
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