Traders See More Currency Volatility No Matter What Omicron Does
- Options activity suggests swings will continue into 2022
- Central banks balance inflation with Covid’s threat to growth
This article is for subscribers only.
Volatility traders are betting that gyrations in foreign-exchange markets will likely last well into next year -- even if fears of the omicron Covid variant subside.
Realized currency volatility in the Bloomberg Dollar Spot Index is near a six-month high as uncertainty about the latest mutation’s virulence causes outsized swings during what’s typically a quiet last month of the year. Meanwhile, several currency pairs have posted their largest daily swings in months -- including a 1.7% drop in dollar-yen, a 2.1% surge in the euro versus the Canadian dollar, 1.8% swings in the euro against the Swedish krona and a 1.3% drop in the Australian dollar.