Currency hedging market humming along.......>

OPTIONS: Currency hedging market humming along nicely so far Tuesday, with more

active options trading in USD/JPY, AUD/USD and USD/TRY more than making up for

quieter EUR/USD trade. Vols tell a slightly different story as markets are happy

to add further downside pressure to short-end contracts following the recovery

in China (and therefore European, US) markets overnight.

- AUD/USD implied vols have seen one of the larger retreats, with the 1m

contract dropping back below 7 points after the unchanged RBA rate decision. AUD

upside exposure has been favoured following the release, with $0.6720-25 and

$0.6750 call strikes in focus.

- Some larger positions adopted in USD/TRY in early Europe warrant attention,

with trades consistent with a 2x1 5.50/6.00 1m put spread crossing. The trade

would break even on a move below around 5.9310 in spot.

- Larger option expiries rolling off at the NY cut today include: EUR/USD -

$1.1030-40(E1.11bln), USD/JPY - Y109.00-10($1.35bln), EUR/GBP -

Gbp0.8500-05(E1.17bln)