US President Trump has threatened to impose tariffs on Chinese exports into the US and pledged to call China a currency manipulator. If the US does take a tough stance on China, there will inevitably be the threat of retaliation and important damage to bilateral relations as trade fears intensify. Any renegotiation is likely to take years, but policy developments will have an important impact on peso confidence.

1. Consequently any person acting on it does so entirely at their own risk.
2. These present some of the highest volatility readings and include pairs like USD/TRY, USD/MXN, and EUR/RUB.
3. However, we have compiled a list of the most volatile currency pairs, along with some of the least volatile and the most liquid based on trends and forecasts from the forex markets.
4. Options and futures are complex instruments which come with a high risk of losing money rapidly due to leverage.
5. If signs indicate that a currency might experience unusual volatility in the coming days, it could be an opportunity to embrace a higher risk level.

So, to begin, we will first help you understand the definition of volatility and currency pairs, then look at the most volatile currency pairs. After reading this guide, you will find it easy to choose the best currency pairs to trade. With that being said, the won currently trades at around 1000 to one against the US dollar. Because of this inflated exchange rate, price movements in the USD/KRW pair are common, and many traders look to this pair as a way to make a quick profit.

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This can change when interest rates are rising in the United States while remaining low in Japan, as the USD/JPY would then become a popular carry trade. The Canadian Dollar has an inverse relationship to the Japanese Yen, just as the Australian Dollar. With Canada being a major oil producer, CAD is sensitive to a change in oil prices.

This is because as oil prices rise, more yen must be converted into CAD to buy a single barrel of oil, with this increase causing the price of CAD/JPY to rise. The Australian dollar is a commodity currency, meaning that its price is heavily linked to the price and volume of Australia’s exports, particularly minerals, metals and – to a lesser extent – agricultural products. Conversely, the Japanese yen is widely considered to be a safe-haven currency, meaning that investors often turn to it in times of economic hardship – something which they do not do with the Australian dollar. The Australian dollar remains geared to the value of commodity prices and health in the global economy. There will be a high degree of uncertainty surrounding the global growth outlook following the election of US President Trump. US policies will also have an important effect on the Chinese outlook which will impact the Australian dollar.

They also display an average weekly, daily, and hourly fluctuations of the pair. To illustrate the lmfx review non-constant nature of volatility, let’s look at the Forex Volatility Calculator. It is used to published exclusive content carefully crafted by our experts as well as it is used to bring you the most recent industry highlights from our guest contributors that wish to remain anonymous.

Understanding Currency Pairs

Generally speaking, the major currency pairs are seen as the least volatile because they have historically been the most traded currencies among traders. Trading volatile currency pairs in Forex isn’t drastically different from dealing with more popular pairs like USD/JPY. The list of highly volatile pairs is extensive, and if you aim to profit from them, certain considerations are essential.

Should you trade a high-volatility currency pair?

The EUR/USD is the most actively traded currency pair in the quebex forex market. This pair experiences high volatility due to the influence of major economic indicators such as GDP, inflation, and interest rates of the Eurozone and the United States. Additionally, geopolitical events and central bank interventions can also significantly impact its volatility. Trading volatile currency pairs is not the same as trading other popular pairs such as the GBP/USD.

Because of this, traders who are interested in the USD/ZAR pair should carry out sufficient analysis on the price of gold and the factors which affect its price before opening a position. Of course, we won’t discourage you from trading the low liquidity currency pairs. However, our task is to warn inexperienced traders and newbies that the risk of such trading is higher than that of trading the classic currency pairs. The AUD/USD pair represents the exchange rate between the Australian dollar and the US dollar. It is heavily influenced by commodity prices, especially gold and iron ore, as Australia is a major exporter of these commodities. Economic indicators from both countries, such as interest rates, inflation, and GDP, also contribute to its volatility.

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This instability was reflected in the fact that the lira fell following heavy losses to President Recep Tayyip Erdoğan’s AK Party in elections held throughout 2019. This was exacerbated by the election of Jair Bolsonaro – a far-right populist – to the presidency in January 2019. On 2 January 2019, a day after Bolsonaro was sworn in as president, the real dropped 2.63% against the dollar, followed by 1.08% the following day and 1.07% the day after that.

This pair is highly reactive to news about Australia’s economy and global central bank interest rates. The key to its volatility lies in the contrasting nature of the two economies. Australia’s economy is commodity-driven, primarily relying on exports like minerals and metals. In contrast, Japan’s economy is seen as a safe haven, maintaining low-interest rates for decades.

Firstly, identify the currencies likely to exhibit significant volatility in the near future. You can achieve this by analyzing historical data or utilizing proven indicators that forecast price fluctuations. Lastly, the pairing of the US Dollar (USD) and Turkish Lira (TRY) is known for its volatility, primarily due to Turkey’s political turmoil since the 2016 coup attempt. The Turkish Lira has faced instability under President Erdogan’s leadership. The future volatility of USD/TRY is closely linked to Turkey’s political landscape and the economic reforms that the next leadership might implement.

Please ensure you understand how this product works and whether you can afford to take the high risk of losing money. The information on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. Accepts no responsibility for any use that may be made of these comments and for any consequences that result.