Currency Traders Buy FX Hedges as 1-Month Volatility Rises From 5-Year Lows
Updated
Updated · Bloomberg · Jul 10
Currency Traders Buy FX Hedges as 1-Month Volatility Rises From 5-Year Lows
3 articles · Updated · Bloomberg · Jul 10
Summary
Currency traders are buying protection against larger exchange-rate swings after months of unusually calm trading, with expected volatility in major currencies edging higher in recent weeks.
Federal Reserve uncertainty and elevated geopolitical tensions are driving the shift, as banks warn changing rate expectations could jolt currency markets.
The move is still early: the one-month volatility gauge sits only slightly above five-year lows hit in June and remains well below this year’s average.
Signals are mixed across pairs, with one-year euro-dollar implied volatility up from 2022 lows while one-month euro-Swiss franc volatility stays at its lowest level in more than a decade.