G10 FX Volatility Expected to Remain Low Through Early September

Morgan Stanley forecasts subdued G10 FX volatility through early September, aiding market absorption of rate hike expectations ahead of the Fed meeting.

Woofun AI notes that Morgan Stanley analysts project low volatility in the G10 foreign exchange market will persist through late August and early September. The firm stated that data leading up to the Federal Reserve's September meeting should align with expectations of unchanged interest rates this year, helping markets absorb rate hike sentiments. Citing a weak long-term link between Fed policy and FX volatility, analysts anticipate downward pressure on volatility.

Additionally, Middle East risks may remain factored into dynamics before U.S. midterms, while August traditionally remains a calm period.