Central Bank Coordination Helps Contain Volatility in US Dollar Market
What happened
A recent industry gathering noted that sharp changes in bonds, oil, and geopolitics are causing currency swings in the global market. The US Dollar market, which handles $9.6 trillion in foreign exchange daily, is experiencing a secular downtrend in currency volatility. Investment professionals stated that greater coordination between central banks has helped contain currency moves, allowing geopolitical shocks to produce only brief bursts of volatility.
From financialpost.com
Why it matters
The current low volatility in the US Dollar market is noted as a challenge for traders who rely on large currency swings. Conversely, the calmer environment could prove beneficial for asset managers and companies that are actively engaged in hedging their currency exposure.
The discussion centers on the dynamics of the US Dollar in the context of global financial market stability.
From financialpost.com
Who's involved
- US Dollar (Next day)The primary currency whose market value is influenced by the FED.
- FEDThe central bank whose policy decisions drive the US Dollar's market value.
- Canadian dollarA major global currency actively traded against the US Dollar.
- euroA major global currency whose trading value is influenced by the US Dollar.
- Indian RupeeA currency whose value is directly influenced by the strength of the US Dollar.
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The entities involved
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US Dollar (Next day)
Distinct currency with ISO 4217 code "USN", defined for trade purposes