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Currency hedging volumes sit slightly.......>

OPTIONS
OPTIONS: Currency hedging volumes sit slightly ahead of average so far Tuesday,
with the UK's return to market and the recent uptick in vols helping drive
activity. Much higher than average volumes crossing in CNY and TRY markets are
more than compensating for lower activity in EUR/USD and GBP/USD.
-Implied vols are mixed, with AUD/USD vols dropping following the unchanged RBA
rate decision, while USD/TRY short-end gains materially on the Istanbul election
re-run and break above 6.00 in spot. USD/TRY risk reversals have been bid from
the off, with the 1m contract re-approaching 8 vol points, but stopping shy of
the 9 points printed in April.
-USD/CNY risk reversals continue to gain despite the stabilisation of the spot
FX rate Tuesday. The 1m contract today touched the best levels since December,
with the Chinese equity market rout at the beginning of the week and MNI reports
today suggesting the China-US trade dispute could extend into 2020. CNY options
markets have been by far the busiest so far Tuesday, with CNY downside exposure
in demand from the off. Notional waged in USD/CNY calls outnumbers that of puts
by $2 to $1, with USD/CNY call strikes at Cny7.00 drawing particular interest.
MNI London Bureau | +44 203-865-3809 | edward.hardy@marketnews.com
MNI London Bureau | +44 203-865-3809 | edward.hardy@marketnews.com

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