Traders adapt to low currency volatility as the new normal

The foreign exchange market moves roughly $9.5 trillion every single day. The JPMorgan Global FX Volatility Index is hovering near its lowest levels since 2024, and emerging-market currency volatility has stayed below G7 levels for nearly 200 consecutive days. That’s the longest such streak since 2008. Carry trades are having a moment When currencies stop moving, traders stop betting on direction and start betting on yield. The playbook is straightforward: borrow in a low-interest-rate currency, park the money in a higher-yielding one, and collect the spread. A carry-trade strategy has gained roughly 18% year-to-date through mid-July 2026, the largest increase since 2005. Relative-value strategies, where traders exploit small pricing discrepancies between related currency pairs, are also gaining traction. The shift was a dominant theme at the TradeTech FX 2026 conference in Amsterdam, held September 15-17. Over 800 attendees showed up, including more than 300 from buy-side firms and corporates. For the second consecutive year, low volatility was the topic that kept coming up in panels and hallway conversations. Winners and losers in the quiet market On the winning side: hedgers. As...