Currency volatility early in year stabilises

While the opening few weeks of 2013 saw increased volatility in forex markets, the dollar, euro, and sterling have settled down again to largely range trade over the past few months.

The euro rose sharply to $1.37 against the dollar in the opening weeks of the year. However, it subsequently fell back into its familiar $1.27-$1.33 trading range, which it has again largely occupied for the past four months.

The debt crisis was a key factor impacting on eurozone financial markets in 2011-12 but its influence has waned this year. Both bond and stock markets have enjoyed strong rallies across the eurozone, despite further difficulties in the periphery. It seems the euro has become more immune to this issue.