The Volatility of Currencies: The Yen, Dollar and Phase One

The Chinese Yuan is the most sensitive currency of the U.S.-China trade war. It rose against the dollar to a one-week high of 7.0181. Its last trade was at 7.0335.

Three-month volatility of the euro/dollar fell to the lowest record of 4.4/4.6%. After the one-month euro/dollar implied volatility, it has fallen to 4.15/4.40%. It is the lowest indicator in five years.

The historical low of the dollar/yen’s volatility is 4%. Now its three-month volatility is at 4.4775/5.025%. The three-month volatility dropped on the Australian dollar to a five-year low of 6.12/6.42%.

Additionally, for the major currencies, traders are increasingly pricing in tighter trading ranges, grounded on implied volatilities.

Before the U.S. Thanksgiving holiday, which is on Thursday, currency trading is slowing down.

Moreover, since Nov 12, the dollar rose to the Yen as high as 109.20. Also, the last trading of the dollar to yen was neutral at 108.96.

So, after the United States dollar lost earlier gains because of the trade war, it stood back, because of the trade talks optimism.

Phase One and Yen

China and the U.S. agreed upon the framework of how to resolve the problems of the Phase One negotiations. Both sides made the administrative work announced Sebastian Galy, the Senior Macro Strategist, at Nordea Asset Management.

Yen become more powerful against the dollar than it was.

People’s Daily, a tabloid run by the Communist Party, announced on Monday that both sides are very close to a phase one agreement.

The U.S. and China agreed to keep communication for the remaining topics of the trade talk. The world is waiting for the phase one negotiations to end. Everyone wants rollbacked tariffs. The global economy depends on that.

The dollar jumped to a two-week high versus the safe-haven Japanese yen in Asian trading.

The Euro is close to the 11-day low versus the dollar.

There are some hopes for phase one negotiations. Let us hope the conclusion will come soon.