Volatility refers to the frequency and amplitude of price fluctuations. It is an important indicator of changes in exchange rates, so traders and investors use it to assess risk. If, in a set time, the price changes dramatically and with large spreads, the volatility is high.
Below we discuss the pairs of that list that move the most.
🔸AUD/JPY
The most volatile currency pair in 2023 is AUD/JPY. While the Australian dollar is a commodity currency, which is strongly linked to mineral and metal exports, the Japanese yen is a safe-haven currency associated with stable economic growth.
🔸NZD/JPY
As one of the world’s major reserve currencies and a stable currency with large trading volumes, the Japanese yen moves slowly. In contrast, New Zealand heavily depends on commodity exports, and its currency is also affected by the prices of agricultural products like milk, eggs, meat, and timber. As a result, the NZD/JPY market is experiencing large price fluctuations.
🔸GBP/EUR
The GBP/EUR pair is made of the British pound and the euro. Both are among the world’s most traded currencies. After Brexit, there is constant volatility in this pair.
🔸CAD/JPY
This currency pair is influenced by trade relations between Canada and Japan, as well as financial reports, balance of payments, and interest rates.
🔸GBP/AUD
The powerful Australian extractive industry struggles because of a slowdown in the Chinese market. Due to the unstable trade relationship between the US and China, there has been a decline in Australian exports to China, and this is a problem for Australian manufacturers and exporters. Trading against the stable pound sterling, the AUD is experiencing volatility.
🔸USD/ZAR
The volatility of the pair is heavily influenced by the value of gold because gold is one of South Africa’s main export commodities, and it’s priced in USD on the world market. Thus, the price of gold depends on the strength or weakness of the dollar.
🔸USD/KRW
South Korea is the 6th largest trading partner of the US. Trade balance influences the 🔸USD/KRW exchange rate, and if Korea has a trade surplus with the US, the KRW experiences greater demand.
🔸USD/BRL
It is known for frequent price movements. The political situation in the country is unstable, and corruption scandals have taken centre stage in the press over the past decade.
🔸USD/TRY
The lira has been volatile since 2016 due to local social and political events. The political situation in Turkey remains unstable.
🔸USD/MXN
Mexico exports oil and gas, cars, electrical equipment, copper and gold. As oil accounts for almost 4% of total exports, its price influences the value of the peso.
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CFDs are complex instruments and come with a high risk of losing your money.
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