Home Dollar volatility rises
Daily Look

Dollar volatility rises

Dollar bulls were squeezed last night as we saw some dramatic moves in FX markets with the dollar plunging after the Fed lowered its inflation and growth forecasts last night. There was every likelihood of there being a spike in volatility during and after the FOMC decision which we warned about yesterday, as well as being consistent in saying any rate hike is likely to come later than many were anticipating. As expected the word “patience” was removed and traders were caught off guard as the dollar headed lower rather than higher as Yellen clarified this did not mean inflation normalising anytime soon. The move was significant across all the majors with GBPUSD getting back above 1.5000, EURUSD exceeding 1.1000 and USDJPY touching 119.30 at its lowest, which would have triggered many stops and therefore exacerbating the moves. The initial reaction has been largely reversed overnight, although the plunge in US Treasury yields has barely see any recuperation of their losses, so doubtless to say the Fed continues to play a waiting game. They want to see a more sustainable improvement in the labour market, in particular on the wage growth front and signs that disinflation pressures are subsiding.

Now the Fed meeting is out of the way and we know the first rate hike will come later in the year, focus will revert back on the single currency as negotiations continue between Greece and its creditors in its quest to secure more funding and avert a Grexit.

Further reading:

SNB maintains policy, mentions CHF strength

EURUSD, GBPUSD, USDJPY Pivot Points, TA – Mar. 19 2015

 

FxPro - Forex Broker

FxPro - Forex Broker

Forex Broker FxPro is an international Forex Broker. FxPro is an award-winning online broker, offering CFDs on forex, futures, indices, shares, spot metals and energies, serving clients in more than 150 countries worldwide. FxPro offers execution with no-dealing-desk intervention and maintains a client-centric business model that puts customer needs at the forefront of our operations. Our acquisition of leading spot FX aggregator, Quotix, enables us to offer access to a deep pool of liquidity, as well as top-class order-matching and some of the most competitive spreads in the market. FxPro is one of only few brokers offering Negative Balance Protection, ensuring that clients cannot lose more than their overall investment. FxPro UK Limited is authorised and regulated by the Financial Conduct Authority (registration number: 509956). FxPro Financial Services Limited is authorised and regulated by the Cyprus Securities and Exchange Commission (licence number: 078/07) and by the South Africa Financial Services Board (authorisation number 45052). Risk Warning: Trading CFDs involves significant risk of loss.