Eerie Calm in FX Leaves Market Vulnerable in More Volatile World
- Idiosyncratic factors include RBA hold, dollar positioning
- Trade issues could cause volatility to pick up: Credit Suisse
Photographer: Xaume Olleros/Bloomberg
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Foreign-exchange options traders may seem out of step, given that the outlook for currency swings has barely moved despite fears of a breakdown in U.S.-China trade talks sending global shares spiraling and volatility in other assets surging.
Measures of currency volatility have risen only marginally in the wake of President Donald Trump’s tweets putting a trade deal in doubt, with the most activity centered on the Chinese yuan. The subdued move contrasts with a sharp jump in equity and interest-rate volatility. Traditional haven currencies also haven’t seen large movements.