Lower volatility prevailing for now

August 18, 2015

The focus for sterling today will be with the inflation data released at 08:30 GMT. The debate regarding the timing of the first interest rate increase in the UK appears to be gathering strength, even though on balance expectations remains grounded in 2016. We’ve had one member of the MPC voting for higher rates and at the same time, more noises from others on the need for higher rates (as we saw yesterday), even if they are not yet voting for this at the monthly meetings. Although the headline rate remains zero in the UK, only 5 of the 12 main categories within the index are seeing negative headline rates. CPI is seen holding zero in YoY terms, with the core rate seeing rising from 0.8% to 0.9%. Sterling could well be more sensitive to the numbers given the greater focus on the potential for higher rates, so a firmer number could well line cable up for a re-test of yesterday’s highs.

Looking elsewhere, what has been noticeable is the decline in volatility seen through the recent weeks, especially after the Greek crisis left the headlines. We’ve seen the Average True Range on EURUSD (1 month) fall to the lowest level seen since March of this year and falling by 30% from the levels prevailing May and June. The same holds true for USDJPY, where the decline in ATR on the same measure has been nearer 40%. Naturally, lower ranges are also a symptom of the summer holiday period. That said, with the Fed meeting approach in September, together with the risk of a Greek election in the coming weeks and negotiations of a Greek debt restructuring likely to start in October, then this lower level of volatility is likely to prove temporary.

Publication source
FxPro information  FxPro reviews

September 23, 2016
Risk rating
The market is in need of a new narrative. The Fed meeting in December is too far off and for now, the US election is not something that entices excitement. With central banks on hold, markets are pushing the envelope in terms of risk...
September 23, 2016
Greenback regains some ground
On Friday, the evergreen buck regained some ground against other key currencies, as markets kept digesting the Fed’s latest policy decision...
September 23, 2016
Dollar rebounds slightly as precious metals are in a hot zone
The US Dollar rebounds after a substantial selloff led by the FOMC decision to leave the interest rate unchanged. The Dollar index, which tracks the US currency against major peers, recoiled with support at a 95.00 level on Thursday, adding 0.05% to the 95.36 price in the early Friday session...

Grand Capital Rating
FBS Rating
XM Rating
FxPro Rating
FXCM Rating
HotForex Rating

TopOption Rating
OptionFair Rating
EZTrader Rating
Anyoption Rating
Banc De Binary Rating
Beeoptions Rating