AUD Volatility Nears 4-Mth High Ahead of RBA, Global Equities Sell Off

The expected fluctuation of the Australian dollar against the greenback rose toward the highest in more than four months while traders weighed prospects for the Reserve Bank to scrap its easing bias as emerging markets drop.

The Aussie dollar was little changed after posting the biggest weekly gain in four weeks. Swap levels show there’s a 97 percent chance the Reserve Bank of Australia will keep rates on hold at 2.5 percent today before releasing its quarterly statement on policy on Feb. 7. New Zealand’s dollar fell after Finance Minister Bill English said the government is “not comfortable” with the currency’s strong level.

“We will be looking for some nuances on a switch from an easing bias to a neutral bias” from the RBA, said Imre Speizer, a market strategist at Westpac Banking Corp. “If they don’t provide that today, it is more likely they will later this week. You may get a small positive reaction upon seeing that change of bias” in the Aussie, he said.

One-month implied volatility for the Aussie versus the greenback rose 10 basis points to 10.58 percent from yesterday, when it touched 10.80 percent, the most since Sept. 30. A basis point is 0.01 percentage point.


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Mingze Wu

Mingze Wu

Currency Analyst at Market Pulse
Based in Singapore, Mingze Wu focuses on trading strategies and technical and fundamental analysis of major currency pairs. He has extensive trading experience across different asset classes and is well-versed in global market fundamentals. In addition to contributing articles to MarketPulseFX, Mingze centers on forex and macro-economic trends impacting the Asia Pacific region.
Mingze Wu