Dollar
Subdued FX volatility in August is unusual: BofA analysts

Unusual Calm in Forex Market Raises Eyebrows, BofA Reports
What’s Happening?
The foreign exchange market has seen an unusually quiet August, which has analysts wondering if calm before the storm. Bank of America (BofA) Global Research notes this tranquility as exceptional, especially amidst global economic uncertainties. Experts predict that volatility, particularly for the USD-CAD pair, is poised to rise soon.
Where Is It Happening?
The subdued activity is observed across global forex markets, with particular focus on the U.S. dollar-Canadian dollar (USD-CAD) pair.
When Did It Take Place?
This unusual calm began in early August and continues as analysts closely monitor market behavior.
How Is It Unfolding?
– FX activity remains unusually low despite global economic woes.
– Analysts attribute the calm to various factors like seasonal trends and pre-positioning strategies.
– The USD-CAD pair is expected to see a sudden surge in volatility, affecting Canada-U.S. trade.
– CFOs worldwide are prioritizing FX management to navigate potential fluctuations.
– BofA’s note suggests this tranquility won’t last long, advising clients to prepare.
Quick Breakdown
– August is typically a turbulent month for forex, but this year is an exception.
– Low investment inflows and speculative trading are contributing to the current calm.
– Market watchers are advising caution, anticipating a volatility rebound.
– The USD-CAD volatility is expected to intensify due to economic disparities between the U.S. and Canada.
Key Takeaways
August’s unusual calm in the forex market signals that volatility is potentially right around the corner. BofA’s warnings suggest that this lull is temporary and that currency movements, especially for the USD-CAD pair, may become more erratic soon. CFOs are actively preparing for potential disruptions, keeping a close eye on currency shifts. Those navigating global markets should heed these insights, as sudden FX changes can significantly impact trade and investments.
The calm is unusual, but the storm is inevitable. Preparation is key.
— Sarah Whitmore, Senior FX Analyst
Final Thought
**The forex market’s current calm is an anomaly, with volatility expected to return soon. Analysts at BofA suggest that global investors should prepare for increased FX fluctuations, particularly between the U.S. and Canadian dollars. CFOs must adopt proactive strategies to mitigate risks as calm markets are often the prelude to significant movements.**
Source & Credit: https://fortune.com/2025/08/25/subdued-fx-volatility-august-unusual-bofa-analysts-cfo/
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