‘New normal’ sees FX volatility remain muted

Dovish stance of major central banks means volatility unlikely to pick up significantly

Central bank expectations of more cheap money for longer can be associated with a lack of volatility, says Jane Foley

Under the ‘old normal’ it was generally accepted that volatility picks up as central banks ease policy in advance of an economic slowdown and then falls as recovery gathers pace. But, in the ‘new normal’, quantitative easing and unconventional monetary policy are turning those dynamics around.

Since the start of 2019, foreign exchange volatility has steadily fallen. From a level of 8.99 on January 1, the JP Morgan global FX volatility index closed at 6.2 on April 24, just off the record low of

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