U.S. Dollar – Yen Volatility Falls to Record

Expectations for price swings in the dollar-yen currency pair fell to a record as signs of an uneven U.S. economic recovery fueled bets the Federal Reserve will keep borrowing costs at unprecedented lows.

The dollar was poised for declines this quarter against most of its 16 major counterparts before U.S. reports this week that economists said will show new home sales slowed and gross domestic product contracted more than earlier estimated. The pound was about 0.2 percent from the strongest level since 2008 before Bank of England Governor Mark Carney testifies today to U.K. lawmakers. Taiwan’s dollar gained as quarterly equity inflows climb toward the most since 2009.

“You would need to see some prospect of change in the trajectory of U.S. monetary policy” before you see any pickup in volatility, said Emma Lawson, a senior currency strategist at National Australia Bank Ltd. in Sydney. “We don’t expect the dollar to deteriorate, but equally, it’s not expected to really take off until we get some indication of a change.”

Bloomberg

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