FX Volatility Sinks as Fed Rate-Hike Bets Support Carry Trades
Low volatility persists in foreign exchange markets amid expectations the Federal Reserve will hold or tighten policy in September, keeping FX carry trades attractive.
Foreign exchange volatility has declined further as markets price in a Federal Reserve that may hold steady or even tighten policy at its September meeting. The subdued environment is fueling demand for carry trades, where investors borrow low-yielding currencies to invest in higher-yielding ones.
For now, these strategies appear set to remain popular. However, traders are closely monitoring developments in bond markets for any signs of a shift that could disrupt the calm.
Source: FXStreet Forex News