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Overnight Vols Soar as Polls Open

OPTIONS

Overnight implied vols for USD vs EUR, JPY and GBP have lurched considerably higher Tuesday as the contract begins to capture the Presidential election results. USD/JPY vols have been a notable mover, adding well over 15 points to hit 22 vols.

For EUR/USD, the contract is now clearing the best levels since the depths of the Coronavirus crisis and Italy's 2018 election which resulted in both the Five Star Movement and League claiming a leadership mandate.

Despite the acute rise in the very front-end of the vol curve, options activity is more muted so far Tuesday, with just USD/CNY and AUD/NZD seeing decent volumes. USD/JPY hedging activity is running at less than half the average for this time of day.

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