Foreign exchange market experienced unusually low volatility in August, traders are waiting for signals from the Federal Reserve.

In August of this year, the volatility of the currency market broke historical patterns. Instead of the usual seasonal rebound, it dropped to the lowest level in a year. The summer market has been sluggish, with investors waiting for clearer signals from the Federal Reserve before making large bets in this market with a daily trading volume of up to $7.5 trillion. Since the tariff disruptions in April disrupted global trade, volatility has been declining for several months. Typically, traders would already be preparing for potential risks events by the end of the year at this time. Normally, August is a very active period in the market, with low trading volume during holidays often leading to increased volatility. However, indicators measuring expected volatility in major global currencies in the coming months have plummeted, prompting strategists to reassess how long this calm state might last. "Although low volatility in exchange rates in August is not the norm for the summer market," write Bank of America strategists Adarsh Sinha and Janice Xue in a report. They expect volatility to increase in September, when a busy schedule of U.S. data releases and questions about the credibility of Federal Reserve policy may shake global markets.