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AUD/USD: Value of put options (bearish bets) rises as Australia GDP growth slows sharply

The AUD/USD fell more than 50 pips earlier today after the ABS reported a sharp slowdown in Australia's growth rate in the September quarter.

Further, the dismal GDP reading seems to have put a bid under the AUD puts. This is evident from the drop in the one-month 25 delta risk reversals (AUD1MRR) to one-week low of -0.825 from yesterday's level of -0.70.

The negative number indicates the implied volatility premium or demand for the AUD puts is higher than that for calls. So, a drop from -0.70 to -0.825 indicates the demand or value for put options has increased today.

Simply put, the investors are adding bets to position for a weakness in the AUD.

AUD1MRR

Author

Omkar Godbole

Omkar Godbole

FXStreet Contributor

Omkar Godbole, editor and analyst, joined FXStreet after four years as a research analyst at several Indian brokerage companies.

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