Currencies having potential to surge atleast 10% today single day

Answered at Nov 23, 2024

Currency Market Volatility and Potential Surges

Currency markets are bracing for significant volatility, with traders positioning themselves for potential surges in various currencies. This report highlights the currencies that might experience substantial movements, possibly surging by at least 10% in a single day, based on current market conditions and geopolitical factors.

Key Currencies to Watch

1. Japanese Yen (JPY)

  • Volatility Drivers: The yen is highly sensitive due to shifting interest rate differentials between the US and Japan. The Bank of Japan has maintained steady interest rates, but potential hikes in December or January could impact the yen significantly (Bloomberg).
  • Market Sentiment: Traders have increased bullish dollar exposure, suggesting a continuation of the yen's recent spot rally.

2. Mexican Peso (MXN)

  • Current Situation: The peso has slumped to its lowest level since September 2022, with one-week volatility reaching a four-year high (Bloomberg).
  • Geopolitical Influence: The US election outcome could heavily influence the peso, especially with potential tariffs on US firms moving production to Mexico if Trump wins.

3. Chinese Yuan (CNY)

  • Volatility Factors: The yuan faces potential volatility due to threats of increased tariffs on Chinese goods by Trump, which could lead to a 7% drop if China does not retaliate (Bloomberg).
  • Economic Events: China's legislative session in early November could introduce fiscal stimulus measures, impacting the yuan's value.

4. Euro (EUR)

  • Market Dynamics: The euro's volatility has surged to its highest level since March 2023, with traders remaining bearish due to potential trade tariffs from a Trump victory (Bloomberg).
  • Potential Impact: The euro could revisit parity against the dollar, with predictions of a 10% drop if Trump and the Republicans win the elections.

Factors Influencing Currency Surges

  • US Election: The upcoming US election is a significant driver of currency volatility. The close race between Kamala Harris and Donald Trump adds uncertainty, affecting currencies like the Mexican peso and euro.
  • Interest Rate Policies: Central bank decisions, particularly from the Bank of Japan and the Federal Reserve, play a crucial role in currency movements. Rate hikes or cuts can lead to rapid changes in currency values.
  • Geopolitical Tensions: Trade policies and geopolitical events, such as potential tariffs on Chinese goods, can lead to significant currency fluctuations.

Conclusion

While predicting exact currency movements is challenging, the current market conditions suggest that the Japanese yen, Mexican peso, Chinese yuan, and euro are poised for potential surges. Traders should closely monitor geopolitical developments and central bank policies, as these factors will heavily influence currency volatility in the coming days.