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Reuters - 2 days ago

Are FX options signaling complacency over French election risks?

BUZZ-COMMENT-Are FX options signaling complacency over French election risks? July 5 (Reuters) - The FX volatility upon which FX options thrive is an unknown, yet key parameter of their premiums, so dealers use implied volatility - their best guess. But this bellwether for real FX volatility expectations has almost erased all of the additional risk premium it had accumulated before the first round the of the French election and opens questions about complacency before Sunday's deciding second-ro
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Reuters - 2 days ago

Australian dollar breaks higher as yields swing its way

Australian dollar breaks higher as yields swing its way By Wayne Cole SYDNEY, July 5 (Reuters) - The Australian dollar stood near six-month highs on Friday as yield spreads swung in its favour, delivering a break of major chart resistance and hefty gains on the Japanese yen. The Aussie was up at $0.6731 AUD=D3 , having gained 0.9% for the week so far to reach $0.6733. The next major bull target is a peak from December last year at $0.6871. The kiwi dollar was lagging at $0.6115 NZD=D3 , to be up
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Reuters - 3 days ago

Societe Generale advocates topside AUD/USD option calls

BUZZ-COMMENT-Societe Generale advocates topside AUD/USD option calls July 4 (Reuters) - Societe Generale recommends buying a 3-month expiry AUD call/USD spread via foreign exchange options with strikes at 0.6900 and 0.7000. Designed to be held until expiry, the option can return five times the premium paid if AUD/USD is above 0.7000. SocGen FX derivatives strategist Olivier Korber's rationale is that the Australian dollar may be the most resilient in the face of U.S.
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Reuters - 3 days ago

Australian dollar hovers near six-month high on US rate outlook

Australian dollar hovers near six-month high on US rate outlook SYDNEY, July 4 (Reuters) - The Australian dollar stood tall near a six-month high on Thursday, after cracking major resistance levels overnight as soft U.S. economic data fanned hopes of a September rate cut, supporting bonds. The Aussie also made further gains on its New Zealand cousin and scaled a fresh 33-year peak versus the battered yen due to robust demand from carry trades - where traders borrow a currency with low interest r
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Reuters - 4 days ago

Australian dollar inches up on upbeat retail data, kiwi struggles

Australian dollar inches up on upbeat retail data, kiwi struggles SYDNEY, July 3 (Reuters) - The Australian dollar edged up against the U.S. dollar on Wednesday as domestic data on retail spending surprised on the upside, but gains were capped by a weak Chinese yuan. The kiwi, however, struggled to pull up from a key chart level. The two, however, stood tall v ersus the battered yen , at near three-decade highs thanks to robust demand from carry trades - where a currency with low interest rates
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Reuters - 5 days ago

French election risk to euro, according to FX options

BUZZ-COMMENT-French election risk to euro, according to FX options July 2 (Reuters) - When the French election was first called on June 9, there was a significant increase in FX option premium to reflect the volatility and directional risk to the euro, and these premiums remain a reliable bellwether. Volatility is an unknown yet key component of an FX option premium, so dealers use implied volatility as a stand-in.
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Reuters - 5 days ago

Australian dollar scales 33-year peak on yen as yields attract

Australian dollar scales 33-year peak on yen as yields attract By Wayne Cole SYDNEY, July 2 (Reuters) - The Australian dollar was near 33-year peaks on the Japanese yen on Tuesday as rising bond yields made it an attractive destination for carry trades, while also fuelling further gains on its New Zealand cousin. Market pricing for steady, if not higher, interest rates at home saw Australian 10-year yields AU10YT=RR strike a two-month top of 4.508% overnight.
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Reuters - 6 days ago

Australia, NZ dlrs edge up on dollar, give back on euro

Australia, NZ dlrs edge up on dollar, give back on euro SYDNEY, July 1 (Reuters) - The Australian and New Zealand dollars started the week on the front foot as a cooling in a key U.S. inflation reading reinforced rate cut bets, while they lost ground to a buoyant euro after France's first round election votes. The Aussie AUD=D3 rose 0.1% to $0.6672, having eked out 0.4% last week to as high as $0.6689 thanks to the benign U.S.
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Reuters - 1 week ago

Huge demand for one particular French election hedge

BUZZ-COMMENT-Huge demand for one particular French election hedge June 28 (Reuters) - There has been a significant increase in premium and demand for an array of Euro related FX options since the announcement of impending French elections, but one particular trade stands out - risk reversals. Risk reversals are simple vanilla FX options that consist of a put strike set against a call strike - the right to sell a currency versus buy it.
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Reuters - 1 week ago

Australian dollar slips to 10-day low, bonds rally to end tough week

Australian dollar slips to 10-day low, bonds rally to end tough week SYDNEY, June 28 (Reuters) - The Australian dollar fell to a 10-day low on Friday as markets pared the chance of a rate hike on dovish comments from a top central banker, while bonds got much needed relief to end a brutal week of sell-offs. With the first U.S. presidential debate out of the way and evoking a muted market reaction so far, traders are looking ahead to the U.S.
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Reuters - 1 week ago

Australia dollar saved by rate hike bets, bonds hammered

Australia dollar saved by rate hike bets, bonds hammered By Stella Qiu SYDNEY, June 27 (Reuters) - The Australian dollar fell back against a strong U.S. dollar on Thursday but held at 17-year highs on the battered yen, while domestic bonds were hammered by risks of a rate hike this year. The Aussie also jumped on the kiwi to the highest in a month as the rate outlook for their respective central banks diverged.
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Reuters - 2 weeks ago

Australian dollar rallies as inflation shock rings rate alarm

Australian dollar rallies as inflation shock rings rate alarm By Wayne Cole SYDNEY, June 26 (Reuters) - The Australian dollar popped higher on Wednesday after data showed inflation accelerated by much more than expected in May, slamming bonds as investors priced in a greater risk of another increase in interest rates. The monthly consumer price (CPI) report showed annual inflation rose to 4.0% in May, from 3.6% in April and well above forecasts of 3.8%.
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Reuters - 2 weeks ago

Australia, NZ dollars notch new highs on yen as yields attract

Australia, NZ dollars notch new highs on yen as yields attract By Wayne Cole SYDNEY, June 25 (Reuters) - The Australian and New Zealand dollars were celebrating fresh highs against the yen on Tuesday as relatively high yields attracted a steady flow of carry trades, while most other crosses remained gridlocked. With the U.S. dollar blocked at 160.00 yen by the threat of Japanese intervention, investors were shorting the yen against other major currencies that offered relatively high yields.
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Reuters - 2 weeks ago

Australia, NZ dollars surge against yen, inflation tests loom

Australia, NZ dollars surge against yen, inflation tests loom SYDNEY, June 24 (Reuters) - The Australian and New Zealand dollars scaled new 17-year tops on the low yielding yen on Monday thanks to persistent carry trade demand, although risk of a reversal looms as Japan stands ready to stop its currency's fast declines. Traders are also looking ahead to Australia's May consumer price report on Wednesday and the U.S.
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Reuters - 2 weeks ago

Australian dollar hits highs on yen and euro as rates diverge

Australian dollar hits highs on yen and euro as rates diverge By Wayne Cole SYDNEY, June 21 (Reuters) - The Australian dollar was heading for hefty weekly gains on Friday as a diverging outlook for interest rates lifted it to a near 17-year high against the yen and a one-year top on the euro. A rate cut from the Swiss National Bank and a dovish policy outlook from the Bank of England stood in stark contrast with the Australian situation where markets are pricing some chance the next move might b
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Reuters - 2 weeks ago

Australian dollar hits 16-1/2-year top on yen, kiwi pares gains after GDP

Australian dollar hits 16-1/2-year top on yen, kiwi pares gains after GDP By Stella Qiu SYDNEY, June 20 (Reuters) - The Australian dollar climbed to a 16-1/2-year peak on the low-yielding yen on Thursday, bolstered by expectations policy will remain tight at home, while the kiwi found the uptick in economic growth underwhelming. Markets continued to pare back the probability of a rate cut from the Reserve Bank of Australia this year, following a hawkish-sounding policy presentation on Tuesday.
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Reuters - 3 weeks ago

Australia dollar carried away by rate view, scales 11-year top on yen

Australia dollar carried away by rate view, scales 11-year top on yen By Wayne Cole SYDNEY, June 19 (Reuters) - The Australian and New Zealand dollars held firm on Wednesday as the outlook for steady interest rates at home attracted carry demand that lifted the Aussie to 11-year highs on the low-yielding Japanese yen. A hawkish-sounding policy presentation from the Reserve Bank of Australia (RBA) on Tuesday led markets to scale back the probability of a rate cut this year to 36%, from 64% at the
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Reuters - 3 weeks ago

Selling the FX fear premium might pay dividends

BUZZ-COMMENT-Selling the FX fear premium might pay dividends June 18 (Reuters) - FX option prices were boosted by FX volatility risk premiums attached to the impending French elections and are looking rather enticing from a short volatility perspective. High FX realised volatility, or expectations of an increase, can drive implied volatility higher. Implied volatility is a substitute for that unknown quantity of FX realised volatility when pricing an option, and in the case of regular vanilla op
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Reuters - 3 weeks ago

Australian dollar gets little lift from RBA's hawkish tilt

Australian dollar gets little lift from RBA's hawkish tilt By Wayne Cole SYDNEY, June 18 (Reuters) - The Australian dollar barely budged on Tuesday after the country's central bank warned there were still reasons to be vigilant against inflation, leading markets to slightly lengthen the odds on a cut later this year. The Reserve Bank of Australia (RBA) ended its June policy meeting by holding rates at 4.35% but noted that data revisions meant household consumption now looked to have been stronge
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Reuters - 3 weeks ago

Euro FX option surge underscores French election fears

BUZZ-COMMENT-Euro FX option surge underscores French election fears June 17 (Reuters) - Demand and premiums for euro-related FX options have surged since the announcement of snap French election and reflect a market extremely worried about results that could undermine the stability of European politics and hurt the euro. The FX volatility upon which FX options thrive is an unknown yet key parameter of their premium, so dealers use implied volatility as a substitute.
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