Daily Outlook

Currency market volatility jumps before U.S. election outcome

Gauges for implied currency swings in the $6.6 trillion a day foreign exchange markets jumped to their highest levels in nearly seven months on Wednesday as traders anticipated more volatility before the outcome of the U.S. elections next week.

Contracts for euro and Japanese yen one-week implied volatility versus the U.S. dollar expiring in a week climbed to their highest levels since early April before the U.S. Presidential elections on Nov. 3.

While general currency market volatility remains elevated this week as Europe experiences a surge in coronavirus cases, the spurt in short-end volatility indicators indicate concerns around the U.S. election outcome, even though odds have stabilised this week.

In equity markets, the widely watched VIX index .VIX held below a June 2020 high.

Currency market volatility jumps before U.S. election outcome, Reuters, Oct 28

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