AUD/USD: Premium for put options rises with the weak Aussie CPI release
|One-month 25 delta risk reversals on AUD/USD(AUD1MRR), a gauge of puts to calls on the Australian currency, fell from -0.65 to -0.725 post the Aussie CPI release, signaling a rise in demand (implied volatility premium) for the Aussie dollar put options (bearish bets).
The inflation, as represented by the consumer price index, rose 0.3 percent quarter-on-quarter in the first quarter, missing the estimated rise of 0.4 percent, the official data released at 01:30 GMT today showed.
The first quarter annualized core CPI or RBA's trimmed mean also missed estimates by printing at 1.6 percent, after having risen 1.8 percent in the preceding quarter.
The increased demand for the Aussie puts indicates the investors are hedging for a deeper drop in the Australian currency. The AUD/USD hit six-week lows near 0.7030 a few minutes before press time.
AUD1MRR
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