Two important data figures will be released at 12:30 GMT; Canadian employment data, which is expected to drop 5,000 in jobs and the unemployment rate to rise from 6.6% to 6.7% and, the U.S. Producer Price Index (PPI) YoY is expected to be unchanged at 0%.

Currently, this week USD/CAD traded at a high of 1.2788, now at 1.27387. As shown in the chart below, these are the highest levels since 2008.

USDCAD

There is a rise in USD/CAD volatility mainly due to aggressive U.S. Dollar strength and also due to these new highs and we expect volatility to continue.

To trade the volatility and take into consideration the price is at a 6 year high, you could place a long straddle position with a downside bias.

A long straddle involves buying both a Put and a Call ATM (at-the-money). To place a bias on the downside you will buy a Call and Put with a 1:2 ratio. This means you will profit if the market trades in either direction but you profit more if it trades down.

Below is a scenario graph and table presenting your payout at expiry over a range of market rates. The Call option is of amount $50,000 and the Put is $100,000, both have strike rate = 1.27387.

USDCAD

The content provided is made available to you by ORE Tech Ltd for educational purposes only, and does not constitute any recommendation and/or proposal regarding the performance and/or avoidance of any transaction (whether financial or not), and does not provide or intend to provide any basis of assumption and/or reliance to any such transaction.

Recommended Content


Recommended Content

Editors’ Picks

AUD/USD: Gains appear capped near 0.6580

AUD/USD: Gains appear capped near 0.6580

AUD/USD made a sharp U-turn on Tuesday, reversing six consecutive sessions of gains and tumbling to multi-day lows near 0.6480 on the back of the robust bounce in the Greenback.

AUD/USD News

EUR/USD tumbles out of recent range, tests below 1.0770 as markets flee into safe havens

EUR/USD tumbles out of recent range, tests below 1.0770 as markets flee into safe havens

EUR/USD slid below the 1.0670 level on Tuesday after an unexpected uptick in US wages growth reignited fears of sticky inflation, chopping down rate cut expectations and sending investors into safe haven bids.

EUR/USD News

Gold pullbacks on rising US yields, buoyant US Dollar as inflation heats up

Gold pullbacks on rising US yields, buoyant US Dollar as inflation heats up

Gold prices drop below the $2,300 threshold on Tuesday as data from the United States show that employment costs are rising, thus putting upward pressure on inflation. XAU/USD trades at $2,296 amid rising US Treasury bond yields and a stronger US Dollar. 

Gold News

Ethereum slumps again as long liquidations exceed those of Bitcoin

Ethereum slumps again as long liquidations exceed those of Bitcoin

Ethereum experienced a further decline on Tuesday following a disappointing first-day trading volume for Hong Kong's spot Bitcoin and ETH ETFs. This comes off the back of increased long liquidations and mixed whale activity surrounding the top altcoin.

Read more

No tap dancing around inflation concerns

No tap dancing around inflation concerns

Tuesday saw U.S. stocks closing considerably lower as investors grappled with economic indicators indicating increasing labour costs and a decline in consumer confidence, all coming ahead of a crucial Fed policy meeting aimed at determining the trajectory of interest rates.

Read more

Majors

Cryptocurrencies

Signatures