Dollar-Yen Signals Are Pointing to Less Turbulent Times Ahead
- FX pair’s 3-month implied volatility has come off recent highs
- U.S.-Japan rate differentials may have peaked in near-term
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The yen’s recent wild swings against the dollar may be coming to an end, according to pricing signals from the option and rates markets.
The currency pair’s three-month implied volatility -- a gauge of future movement factoring in recent price moves and upcoming event risks -- has dropped from a two-year high. Meanwhile, expectations for Federal Reserve rate hikes may have peaked out.