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Total currency hedging volumes are lower....>

OPTIONS
OPTIONS: Total currency hedging volumes are lower than average so far Friday,
with muted activity in EUR/USD and USD/CNY largely responsible. Bright spots,
however, include USD/MXN after the 3% jump in spot overnight, with USD/CAD and
USD/HKD also seeing better than usual volumes.
-USD/MXN calls have been better bought, but the USD/MXN put/call ratio is more
balanced than a quick glance at the spot rate would suggest, with total call
notional only around 20% higher than that of puts so far today. Call strike
interest in USD/MXN today is clustered around the 19.8500-19.8625 and as high as
21.00. Structures have tended to position for further volatility, with one of
the larger trades including a $400mln 19.10/21.00 strangle rolling off at the
beginning of July.
-After a short quiet period, interest has again picked up in USD/HKD upside
exposure, with over $400mln 7.85 call strikes crossing Friday. The trades run in
parallel with a modest uptick in USD/HKD vols, with the 1m measure returning to
the upper end of the May range.

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