May 30 2014

FX Volatility Falls To 7-Year Low 

Rate Range Projection by Bank

 Next week 101.40- 102.30

Next 3 months 100.00 - 105.00

 

Brazil’s real declined to a three-week low after a report showed economic growth slowed in the first quarter.“The forward-guidance policy by the central banks is keeping a lid on rate expectations,” said Peter Kinsella, a senior foreign-exchange strategist at Commerzbank AG in London. “We’re increasingly going to see very flat volatility.

 

The yen was little changed at 101.77 per dollar, and is up 0.5 percent this month. The euro gained 0.2 percent to $1.3635, paring its monthly decline to 1.7 percent. The shared currency added 0.2 percent to 138.74 yen, trimming its loss since April 30 to 2.1 percent.

 

It doesn’t seem at present that there’s going to be any catalyst to shake us from the malaise.”JPMorgan Chase & Co.’s volatility index for the currencies of the Group of Seven nations fell to 5.93 percent at 5:01 pm. New York time, reaching the lowest level since June 2007. A separate JPMorgan index measuring global foreign-exchange volatility also reached a 2007 low.

 

Foreign-exchange volatility slowed to the lowest level in almost seven years as central-bank polices of monetary stimulus and forward guidance restrain price swings. The yen strengthened earlier as a government report showed inflation accelerated to the fastest in more than two decades in April, reducing the prospect of additional stimulus by the Bank of Japan. The rand fell as South Africa’s trade deficit widened in April.