Dollar Index Volatility Set to Heat Up Amid NFP Reports
The US dollar index typically experiences lower volatility during summer months, but August's final two weeks saw a significant whipsaw that covered most of its range. This was despite August having a relatively low high-to-low range of 1.5% since November.
With the ISM services and NFP reports pending, traders are on high alert for clues about Fed policy, which could lead to further volatility ahead. This is particularly concerning given that August has historically been the third most volatile month of the year according to seasonality patterns.
The US dollar index's relatively low volatility in summer months may be an anomaly this year, as traders are hunting for signs of a potential interest rate hike by the Federal Reserve. The Canadian dollar recently weakened against its US counterpart due to investors betting on a Fed rate increase next month.