Expectations of currency volatility that is monitored by a gauge jumped to a 8 month high this week as investors faced with re-appraising the diagnoses for global growth amidst the American policy and the ongoing Ebola spread.
The want for haven assets also spurred on the 2 week gain for the yen since June 2013 making it the biggest in 2 weeks. The greenback was poised for a drop versus 11 of 16 peers this week as traders beat prospects for a U.S. increase in interest rates. The kiwi dropped 1 percent before it pared losses just after the central bank incorrectly republished comments back in September claiming the dollar level to be unjustified.
At the Royal Bank of Scotland Group Plc the head of Asia-Pacific markets strategy, Greg Gibbs said;
Volatility has jumped across all asset classes, including FX markets. You can put it down to the weaker economic outcomes we’ve seen lately. German data has been soft, Chinese data has been soft, and there’s Ebola.
An index tracking global FX volatility jumped to as much as 8.56 percent earlier this week making it the most since back in February the 6th, rising above a record low 5.28 in July.
The greenback was trading at 106.22 yen as of 12:20 pm Tokyo time from its 106.33 early yesterday, poised for a 1.4 percent fall this week. It has remained unchanged at $1.2801 per euro, a lower 1.4 percent since October the 10th. The kiwi dropped 0.3 percent against the Aussie dollar to NZ $1.1044, further more it was 0.2 percent lesser at 79.38 U.S. cents.
Suppositions that the American Central Bank will be raising its rates next year was the driving factor behind the record rally for the dollar. However that started to reverse just after minutes of FOMC meeting in mid-September indicated that participants said on expansion the following:
might be slower than expected if foreign economic growth came in lower than thought.