Euro Pressured as Volatility Rises on Jackson Hole, FOMC Meeting
- Dollar stabilizes as traders stay pat amid White House turmoil
- Yen outperforms; sterling little changed before Brexit papers
Sheets Says Central Banks Short on Inflation Objective
The euro started the week on a defensive footing amid thin flows as the market’s focus remained fixed on the central bankers’ summit at Jackson Hole, Wyoming later this week, which has kept intact demand for long-volatility trades.
Even as odds have diminished that the Federal Reserve’s annual symposium could be a game changer for markets, the euro’s one-week implied volatility rose the most since July 13 as long-vega trades gained traction. U.S.-South Korea joint military drills starting Monday, which raises the risk of a rebound of North Korea-related tensions, also supported the case for such positioning. The relative premium to own exposure in euro-dollar options over Jackson Hole rose to a three-week high.