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© Reuters. Illustration photo of Australian dollars

Risk currencies buoyed by cautious hopes pandemic is peaking

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© Reuters. Illustration photo of Australian dollars

By Hideyuki Sano

TOKYO (Reuters) – Risk-sensitive currencies climbed on Thursday on budding optimism the coronavirus pandemic may be peaking although the euro was dented by the European Union’s failure to agree on more support for their weakened economies.

The Australian dollar fetched $0.6233 , trading near its highest level since mid-March and extending its rally from its 17-year trough of $0.5510 touched three weeks ago.

The euro stood at $1.086 (), having slipped 0.35% on Wednesday, after European Union finance ministers failed in all-night talks to agree on more economic support for their coronavirus-stricken economies.

Two main sticking points were conditions for access to emergency credit lines in the euro zones’s bailout fund and the notion of issuing joint debt by the bloc, so-called “coronabonds”.

The euro’s drop overnight helped to lift the () a tad to 100.120.

But the index is down 0.5% so far this week as safe-haven flows to the U.S. currency eased on rising hopes much of Europe and the United States could soon see themselves out of the worst period of the COVID-19 pandemic.

“New York reported its biggest death toll while infections hit the highest level in four days in Spain and three days in Italy,” said Tohru Sasaki, head of Japan market research at JPMorgan (NYSE:). “All these are negative but forecasts both from governments and experts that the peak could come within days are leading markets not to focus on those details.”

New York state on Wednesday reported the most coronavirus cases in the world, overtaking Spain, according to a Reuters tally.

More focus is on the U.S. initial jobless claim data [USJOB=ECI] due at 1230 GMT.

The average forecasts of economists stood at 5.25 million after a total of nearly 10 million claims over the past two weeks.

“Markets already know that the economy is being hit by extraordinary shocks,” said JPMorgan’s Sasaki. “Even if the number increases, it will probably surprise few people while a better reading could enhance the perception that the worst may be over and trigger a bigger market reaction.”

On top of hopes of a peak in the epidemic, commodity-linked currencies, including the , got an additional boost from hopes that major oil producing countries could agree to cut output at a video conference on Thursday.

Media reports suggested Russia would cut its output and Algeria’s energy minister said he expected a “fruitful” meeting though there remained tensions between the world’s top three producers, the United States, Saudi Arabia and Russia.

The Canadian dollar traded at C$1.4020 per U.S. dollar, not far off this week’s peak at C$1.3945. The Canadian unit has been recovering from a four-year low of C$1.4669 hit on March 20.

The yen stood at 108.85 yen per dollar and has been trading in a narrowing range so far this week.

Graphic: World FX rates in 2020 https://graphics.reuters.com/GLOBAL-CURRENCIES-PERFORMANCE/0100301V041/index.html

Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.



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© Reuters.  The Money’s Not Coming Home: $690 Billion Remittance Risk

The Money’s Not Coming Home: $690 Billion Remittance Risk

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© Reuters. The Money’s Not Coming Home: $690 Billion Remittance Risk

(Bloomberg) — The amount of money migrant workers send to their home countries usually holds up well in a crisis. Not this time.

Waves of job losses among overseas workers and international border closures are sapping the $690 billion annual flow of global remittances at a time when many emerging economies need hard currency more than ever. Lebanon, Ukraine and the Philippines will be among the hardest hit, while Latin America could see an 18% drop in money being sent home compared with last year.

Global remittances flows have reached record highs in recent years as countries have become more closely interconnected. Apart from China and Ecuador, most of the reported Covid-19 cases come from industrialized nations that are home to the majority of the world’s migrant workers, according to Manuel Orozco, who directs the Inter-American Dialogue’s migration, remittances and development program in Washington.

The crisis could wipe out 6.7% of working hours globally in the second quarter of this year, according to the International Labor Organization. More than a billion workers are at high risk of a pay cut or losing their job, the organization said.

The shock from coronavirus “upends the wisdom about remittances being very stable” said Elina Ribakova, deputy chief economist at the Institute of International Finance in Washington. “The countries where migrant workers are temporarily based are experiencing a big crisis, and many of them are in the sectors that are being hit.”

Here’s a rundown on some of the emerging markets that will be affected the most:

Lebanon (12.5% of GDP)

Lebanon was already suffering from a drop in remittances due to a sovereign default and economic turmoil. Money sent home from the country’s diaspora used to be a key factor in keeping finances afloat. Unofficial capital controls imposed by commercial lenders have put pressure on household finances, leading to a devaluation in black-market rates for the pound.

Ukraine (11.8% of GDP)

Ukrainian workers who flocked to higher-paying jobs in the European Union in recent years rushed to get back home last month before the border was closed. The central bank said remittances could drop by as much as $3 billion this year as a result.

“If we take some remittances off the balance, then it should devalue the hrvynia,” said Vitaliy Sivach, a Kyiv-based bond trader at Investment Capital Ukraine. “The big question is how long it will last.”

The currency has fallen more than 12% this year, but lower energy prices and rising revenue from wheat exports may offset some of the damage.

Philippines (9.8% of GDP)

The Philippines deploys more than a million workers abroad every year, mostly to the Middle East. Remittances from Filipinos working overseas, which account for about one-tenth of the economy, may decline by as much as 30% this year as thousands of workers return home, Economic Planning Secretary Ernesto Pernia told ABS-CBN News.

Egypt (8.8% of GDP)

Remittances and tourism are the two largest sources of foreign currency for Egypt and many Egyptians working overseas are based in countries dependent on oil exports.

The drop in repatriated money, combined with a recent slump in portfolio inflows, will erode the country’s foreign-currency reserves, according to Ehsan Khoman, head of Middle Eastern research at MUFG Bank in Dubai.

Dominican Republic (8.6% of GDP)

The Dominican Republic has one of the highest remittance rates in Latin America as a share of gross domestic product, World Bank data show. Foreign workers sent $582 million home in January, according to the central bank.

Pakistan (7.9% of GDP)

Pakistan’s central bank intervened to stop a plunge in the rupee last week as remittances dropped. Almost a third of Pakistan’s money transfers come from the U.S. and the U.K., two countries at the epicenter of the coronavirus outbreak, according to Mohamed Abu Basha, head of macroeconomic research at Cairo-based investment bank EFG Hermes.

“I would expect to see a bit of a slowdown for one to two quarters because of that exposure,” Abu Basha said, adding that some of the drop will be offset by lower fuel costs.

Mexico (3.1% of GDP)

Remittances to Mexico totaled $2.7 billion in February, up 10.5% year on year. Money transfers from abroad, mostly the U.S., account for a significant part of the country’s informal sector. A drop will likely hamper household incomes and further damage the country’s economic outlook.

El Salvador (20.8%), Honduras (21.4%), Guatemala (13.0%) and Nicaragua (13.1%)

In Central America, a region ravaged by gang violence, drug trafficking and poverty, remittances are a multi-billion dollar industry that have made governments less reliant on the bond market for financing. Under emergency coronavirus measures, the U.S. has implemented a rapid-fire deportation system. Unauthorized border crossings have tumbled, and initial data from this year show remittance flows have already declined.

 



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© Reuters.  Sentiment Plunges to a Record Low on Japan’s Main Street

Sentiment Plunges to a Record Low on Japan’s Main Street

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© Reuters. Sentiment Plunges to a Record Low on Japan’s Main Street

(Bloomberg) — Japanese merchants may never have been more worried.

Sentiment among store managers, barbers, taxi drivers and others who deal directly with Japanese consumers plummeted to a record low at the end of March, according to results Wednesday from a Cabinet Office survey that goes back to 2002.

The Economy Watcher’s survey is one of the first consumer-related data points released by the Japanese government each month, so it offers an early glimpse of how people on the ground are feeling about the fast-moving impact of the coronavirus.

An index in the survey measuring people’s view of their current circumstances showed more gloom than after 2011’s deadly tsunami disaster or during the global financial crisis. Another index of people’s outlook also fell to a record low.

And the situation is likely to have gotten worse since the survey. With infection numbers jumping recently, Prime Minister Shinzo Abe Tuesday declared a state of emergency covering Japan’s main cities. He also unveiled a record aid package to stem the economic damage as the country hunkers down.

A separate report Wednesday from Tokyo Shoko Research showed Japanese bankruptcies jumped 12% in March from a year earlier. Business failures have increased by double-digits in each of the last four months. Some economists now see the economy shrinking more than 20% this quarter.

Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.



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© Reuters.

Research Institutes See German GDP Falling 9.8% in Q2

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© Reuters.

By Geoffrey Smith 

Investing.com — Germany’s economy will shrink by nearly 10% in the second quarter due to the coronavirus pandemic, after already contracting 1.9% in the first three months of the year, according to a new report by the country’s leading research institutes. 

The institutes expect a rebound in the second half of the year but still forecast GDP to fall 4.2% over 2020 as a whole. They predict a rebound of 5.8% in 2021.

Germany’s economy is thought by some to be better positioned with regard to the virus, in as much as it relies more on manufacturing. By contrast, the virus has taken its biggest toll on service sectors of the economy, such as travel and leisure.

Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.



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© Reuters.  Euro, Italy Bonds Slide After EU Fails to Agree on Virus Defense

Euro, Italy Bonds Slide After EU Fails to Agree on Virus Defense

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© Reuters. Euro, Italy Bonds Slide After EU Fails to Agree on Virus Defense

(Bloomberg) — The and declined after European Union finance ministers failed to agree on joint measures to cushion the region’s economy against the impact of the coronavirus crisis.

The common currency fell against most Group-of-10 peers, while benchmark debt yields in Italy, seen as the most vulnerable economy to the pandemic, jumped to a three-week high. German bunds, a haven asset, rallied in contrast following the failure after a teleconference that lasted more than 16 hours.

“This is negative for the periphery who are suffering the most from the crisis,” said Pooja Kumra, senior European rates strategist at Toronto-Dominion Bank. “These mutual decisions will be a struggle and could drag.”

Markets had been expecting a package of stimulus measures totaling around half a trillion euros, involving support from the European Stability Mechanism, the European Investment Bank and the European Commission.

The euro dropped as much as 0.6% to $1.0830, while Italian 10-year bond yields jumped 18 basis points to 1.80%, the highest level since March 19. yields dipped five basis points to -0.36%.

.

 

Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.



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Forex - Dollar Gains as Coronavirus News Disappoints

Forex – Dollar Gains as Coronavirus News Disappoints

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By Peter Nurse

Investing.com – The U.S. dollar is back in demand Wednesday, as investors sought safe havens amid disappointing news surrounding the coronavirus outbreak and the economic damage in Europe becomes apparent.

At 3 AM ET (0700 GMT), the , which tracks the greenback against a basket of six other currencies, stood at 100.345, up 0.4%, while fell 0.3% to 1.0857 and dropped 0.3% to 1.2300. climbed 0.1% to 108.81.

The U.S. recorded its highest single-day increase in virus deaths on Tuesday, with some 1,800 deaths. Governor Andrew Cuomo said that deaths in New York state also rose. 

This came as a disappointment as the state had previously seen two days of slowing infection rates and fewer deaths.

“Risk aversion and the U.S. dollar are going hand in hand,” Ray Attrill, head of FX strategy at National Australia Bank, told CNBC.

“Improvement has been based on less-bad statistics coming out of various parts of the world…but our view is that markets are going to remain choppy – we can’t expect an uninterrupted flow of singularly good or singularly bad news,” he added.

The euro is weakening as Eurozone finance ministers struggle to reach an agreement on how to assist ailing member states hit by the coronavirus. 

The sticking point appears to be the issuance of common debt instruments to finance the coronavirus-related spending, commonly known as ‘coronabonds’, which France, Italy and Spain in particular are pushing for, while Germany, the Netherlands, Austria and Finland are against.

However, the need for aid is becoming more apparent with every passing day.  

The Bank of France estimated Wednesday that the country’s economy contracted 6% in the first quarter due to the lockdown measures put in place to combat the coronavirus outbreak. That would be the biggest contraction on a quarterly basis since World War II.

And these measures don’t look like ending anytime soon, with the Italian press reporting that Italy may not reopen schools before September.

 

Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.



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© Reuters.

FOREX – U.S. Dollar Rebounds as COVID-19 Death Toll Rises

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© Reuters.

By Gina Lee

Investing.com  The U.S dollar reversed its losses on Wednesday in Asia as investors flock to safe havens amid increasing numbers of fatalities from the COVID-19 pandemic.

New York state and the United Kingdom announced their highest daily death toll overnight, despite the falling number of cases reported in the beginning of the week. New York governor Andrew Cuomo reported 5.489 deaths in the state overnight.

The , which tracks the greenback against a basket of other currencies, gained 0.34% to 100.257 by 11:50 AM ET (4:50 AM GMT).

“Risk aversion and the U.S. dollar are going hand in hand,” said Ray Attrill, head of FX strategy at National Australia Bank, told CNBC.

“Improvement has been based on less-bad statistics coming out of various parts of the world…but our view is that markets are going to remain choppy – we can’t expect an uninterrupted flow of singularly good or singularly bad news,” he added.

The pair was down 0.11% to 108.8as Prime Minister Shinzo Abe officially announced a state of emergency overnight.

The pair lost 0.16% to 1.2317 as Prime Minister Boris Johnson entered his second day in intensive care to treat the virus.

The pair slid 0.61% to 0.6129 as S&P downgraded its outlook on the country’s sovereign AAA rating from stable to negative.

The pair was down 0.37 % to 0.5952 whilst the pair gained 0.35% to 7.0671.

“While the virus’ curve is flattening, the economic effects of the corona crisis will linger for years,” Joe CapursoCommonwealth Bank of Australia currency analyst, told CNBC.

“Economies will take time to re-open, some businesses will not re-open, and unemployment will take years to (recover). We think that means the dollar and yen will re-strengthen,” he said. 

Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.



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© Reuters.

Dollar creeps higher as virus worries return

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© Reuters.

By Tom Westbrook

SINGAPORE (Reuters) – The dollar found a footing on Wednesday as investors returned to safe-havens, unwinding some risk currency gains made on hopes the coronavirus crisis in Europe and New York was slowing.

The greenback rose on most majors besides the safe-haven Japanese yen, a day after suffering its worst drop against a basket of currencies in nearly two weeks.

Safe-haven gains were slight but gathered pace in morning trade as the two-day rally in Asia’s equity markets lost steam and bonds and gold firmed. [MKTS/GLOB]

The U.S. currency rose most against the risk-sensitive Australian and New Zealand dollars, gaining about 0.5% on each to sit at $0.6142 per and $0.5951 per . [AUD/]

“Risk aversion and the U.S. dollar are going hand in hand,” said Ray Attrill, head of FX strategy at National Australia Bank in Sydney.

“Improvement has been based on less-bad statistics coming out of various parts of the world…but our view is that markets are going to remain choppy – we can’t expect an uninterrupted flow of singularly good or singularly bad news.”

The dollar edged 0.1% lower to 108.55 yen . It rose a fraction against the British pound to $1.2321 and euro () to $1.0878.

The Aussie was also knocked by ratings agency S&P downgrading the outlook on the sovereign AAA rating from stable to negative.

New York overnight reported 731 fatalities from COVID-19, the respiratory disease caused by the virus, the sharpest single-day spike, but state Governor Andrew Cuomo drew hope from an apparent levelling off in the number of hospitalisations.

Across the Atlantic, British Prime Minister Boris Johnson, who has the illness, is in intensive care for a second night although his condition is stable.

Elsewhere in Europe, Spain’s daily toll of coronavirus deaths rose for the first time in five days, but officials there and across the continent pushed forward with plans to begin lifting some lockdown measures soon.

In Asia, the dollar rose 0.5% against the Korean won and lifted from a three-week low against the – rising 0.1% to 7.0730 yuan in offshore trade . [CNY/]

Investors are keenly watching as lockdowns lift in Wuhan, China, the epicentre of the pandemic, for clues as to how the rest of the world may fare when the worst has passed.

Authorities are walking a fine line between allowing greater freedom of movement and preventing a second wave of infection, with particular concern people who show no symptoms but can still pass on the virus.

Later on Wednesday, the U.S. Federal Reserve releases minutes from its emergency meeting last month, which may include more commentary on the depth of the economic contraction that looms.

“While the virus’ curve is flattening, the economic effects of the corona crisis will linger for years,” said Commonwealth Bank of Australia currency analyst Joe Capurso.

“Economies will take time to re‑open, some businesses will not re-open, and unemployment will take years to (recover).  We think that means the dollar and yen will re-strengthen.”

Graphic: World FX rates in 2020 https://graphics.reuters.com/GLOBAL-CURRENCIES-PERFORMANCE/0100301V041/index.html



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© Reuters.

Pound Extends Gains as PM Johnson Remains in ICU but in

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© Reuters.

By Yasin Ebrahim 

Investing.com – The pound extended its rally pound against the dollar on Tuesday as investors digested news that Prime Minister Boris Johnson remained in intensive care and his condition was “stable.”

rose 0.94% to $1.2344, to trade close to session highs of $1.2385.

U.K. Foreign Secretary Dominic Raab, who is deputizing for the prime minister, said Johnson remained in critical care but his condition was “stable” overnight.

“He’s receiving standard oxygen treatment and breathing without any assistance, he’s not required any mechanical ventilation or non-invasive respiratory support,” Raab added as he delivered the daily coronavirus press conference.

There will be no further update on Johnson’s condition until Wednesday, according to U.K media reports.

The Covid-19 pandemic has infected more than 51,000 in the U.K., with the death toll rising to nearly 5,400.

Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.



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© Reuters.  It’s Back to the Future for Currencies With Volatility Like 2008

It’s Back to the Future for Currencies With Volatility Like 2008

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© Reuters. It’s Back to the Future for Currencies With Volatility Like 2008

(Bloomberg) — The global financial crisis may offer proper guidance on how currency volatility will play out beyond the current market turmoil, even though the two shocks are vastly different in nature.

What seems clear is that investors may need to say goodbye for the foreseeable future to the low-volatility regime in foreign exchange, with hedging throughout 2020 likely to be costly, compared to recent experience.

Long-term bets look set to turn more expensive compared to shorter-dated ones due to the uncertainty surrounding the coronavirus pandemic endgame. That pattern will be reminiscent of the collapse of Lehman Brothers, one of the most emblematic moments of the 2008 crisis.

Once again, monetary and fiscal stimulus has been unleashed in unprecedented size and power. But just as in 2008-2009, there will be fear in the market that it may not be enough to alter the longer-term outlook. Investors will be on watch for lurking credit risks and concerns over funding stresses will remain. Officials have managed to stabilize the markets — for now — yet the enhanced uncertainty creates unease on the outlook on conditions a year from now.

The abrupt shock in the currency volatility space last month resulted in record highs in euro gauges and has been followed by a deep sell-off. It’s been especially notable on options trades with an expiration date of one-week up to one-month. Comparing current volatility levels to past-year averages show that there is still more room for the short-term hedging premium to narrow compared to longer-dated plays.

Already, the so-called inverted volatility term structure in the major currencies — essentially a curve that shows hedging is currently less expensive at longer tenors — has taken a hit. That’s a sign investors are becoming less sensitive to coronavirus headlines and are shifting focus to upcoming meetings by policy makers.

Markets are more stable having priced in the immediate impact of the pandemic. They must now assess how circumstances will change when countries begin to phase out their lockdowns. The risk of a second wave of infections in autumn will probably keep implied volatility in the major currencies higher than the levels seen last year.

That helps explain bets that ranges will widen more on a yearly basis compared to a monthly one, as shown by the pound chart below.

  • NOTE: Vassilis Karamanis is an FX and rates strategist who writes for Bloomberg. The observations he makes are his own and are not intended as investment advice

©2020 Bloomberg L.P.

 

Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.



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