Forex Futures Recent Diminished Volatility Question

[acdrew0 10]

I have noticed that recently, within the past year or so, that the volatility of the forex futures has been very low, making my bollingers very narrow and difficult to trade with some of my methods.

 

I noticed this for all of the forex futures, but in specific the pound futures 6B. I made an indicator of the average daily trading range over 30 days and compared them over the years.

 

Currently the average daily trading range for 6B is around 80 or so tick per day for the past month or two and within 2012 has been hovering around 100. This seemed only to be similar to a much shorter period of time in mid 2007.

 

It seemed that the average trading range was around 150 for the majority of time within the past 10 years other than the high volatility around 2008 crash and rarely dipping to or under 100.

 

I am curious if anyone knows what the reason could be for this recent trend.

[Qiman 10]

Yes, I also have noticed the constricted ranges. Very telling was how this past week the forex futures reacted far less than one would expect with respect to the very large stock index swings!

 

In general, I look at the forex futures as being somewhat stuck in an extended congestion range. And to me, this low range congestion area is a reflection of the constant push-pull uncertainty of countervailing headlines coming out of mostly Europe these days, but occasionally China as well. So neither the bulls nor bears are ever able to grab much momentum before a countervailing headline comes across the news wires. In essence this is more of a headlines driven market, this is a period of relative balance between the two forces, and once one side gains some substantial momentum we could see some larger range coming back into these markets. The whole fiscal cliff thing in the US could create some high volatility days on its own!

 

In the meantime, the soy and corn contracts have seen major volatility due to weather and actual supply-demand dynamics. Much better price action was there for a few months.

[BlueHorseshoe 10]

I don't know the answer to this. Could it possibly be to do with the supposedly diminishing speculative activity by the commercial banks? Maybe someone with a better understanding of macro economics etc will have the answer . . .

 

BlueHorseshoe

[nelsonhimes 10]

Thanks for your great reply Qiman.