Another decent day for currency hedging.....>

OPTIONS: Another decent day for currency hedging volumes (mirrored in healthy

activity in FX futures) with the AUD/USD and USD/CAD options markets

particularly busy compared to recent averages. It's been a mixed day for vols,

however, as most DMFX implied contracts pull lower, while Asia-Pac vols remain

supported.

- The one standout is GBP, as front-month vol tenors have inched higher

following today's turnaround in the implied rate cut probability for the looming

Bank of England decision. This comes despite the persistent pullback in realised

vols, making this Friday's PMI data the next flash point for activity.

- The front-end of the EUR vol curve has resumed its downward trend despite the

proximity to this Thursday's ECB decision. 1m vols now sit at (again) the lowest

levels on record at 3.8 points as the whole curve itself flattens further.

Naturally, the overnight EUR/USD vol contract has edged higher as it captures

Thursday's ECB, but sits considerably lower than previous pre-meeting spikes in

2019. This indicates a distinct lack of expectations that the ECB will move

markets tomorrow.