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Volatility plagues FX markets

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21 December 2022

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Volatility plagues FX markets

The AUDUSD trading range of 24% for the year of 2022 was surpassed only once in the last 12 years. So, what’s causing the volatility in the foreign exchange markets?

James Swerling from Ebury says central banks are definitely a factor. He says FX was more predictable with most central banks operating in a tiny range for the last decade and then all cutting to zero together in 2020. With many indicating hiking cycles are still to conclude and not foreshadowing a subsequent reduction, James says FX markets will remain highly active.

Looking to 2023, he says black swan events will always crop up and these cannot be planned for in conventional FX trading strategies. James says central banks will only move in unison again when the next recession or significant economic crisis hits.

Watch full video here.