FX Daily Snapshot
Financial analysts at MUFG Research suggest that global market volatility is likely to increase due to rising US bond yields and geopolitical tensions. The report notes that the US dollar remains strong as markets weigh the possibility of Federal Reserve rate hikes.
Why it matters
Understanding shifts in FX volatility and central bank policy is essential for global investors navigating current macroeconomic instability.
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With FX volatility still depressed as highlighted by the MUFG FX Volatility Index hitting the lowest level since pre-covid it seems logical to believe that the only way from here is for FX volatility to spike higher. Risks of a jump in volatility are definitely growing with Brent crude oil through the USD 100-level, yields rising in all major bond markets and AI-related volatility continuing to point to an increased risk that a larger correction in global equities is approaching.
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