Currency Calm Frays as Fed Threatens Another Storm of Volatility
- Traders fret over central bank meetings as liquidity fades
- Disquiet shows up in volatility spreads, basis swaps data
What's Happening in the Currency Market?
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As the Federal Reserve prepares to raise interest rates that have been near zero for almost seven years, a sense that the currency market is becoming trickier to navigate is spreading.
Traders are more wary of a jump in price swings than at any point in the past two years, measures of foreign-exchange volatility show. And demand for the dollar is so strong that the cost of converting euro, sterling and yen payments into the world’s reserve currency via funding markets is close to the highest since at least 2012.