⚠️💱Global FX Vol Tends to Bottom In July: Cable FX Macro

• During the summer, especially in July and August, trading activity typically declines as numerous market participants, such as institutional investors and traders, go on vacation. This results in less active markets, with fewer substantial trades that might cause major price fluctuations, leading to decreased volatility.

• Below, the chart shows a 10-year average historical trading in a global FX measure constructed by J.P. Morgan. While volatility tends to bottom in July, the Summer dull is seen extending through August. Economic data releases and corporate earnings announcements are typically lighter in the summer, especially in August. With fewer major catalysts like central bank meetings, GDP reports, or earnings seasons, markets experience less uncertainty, contributing to calmer price movements across asset classes.

• As a trader, it's crucial to consider these factors and adapt your strategies to the current market conditions to prevent prolonged declines in returns. Historical daily price changes from 1973 to 2025 indicate that July and August generally exhibit lower standard deviations in daily returns (approximately 0.3–0.4%) compared to October (around 0.5–0.6%). However, exceptions can occur during crises, such as in August 2011 (Eurozone debt crisis) or 2020 (COVID-19).