USD/CAD: Options market teases bears for the first time after March

Anil Panchal FXStreet

One-month risk reversal (RR) on USD/CAD, a measure of the spread between call and put prices is up for printing the first monthly shortfall since in five, according to data source Reuters.

A call option gives the holder the right but not obligation to buy the underlying asset at a predetermined price on or before a specific date. A put option represents a right to sell. That said, the monthly RR drops to -0.050 by the press time of early Monday.

The options market signal justifies the USD/CAD price performance as the Loonie pair prints a five-day downtrend with an intraday loss of 0.22%, around 1.2623 at the latest.

Considering the firmer oil prices and risk-on mood weighing down the US dollar, USD/CAD seems to have a further downside to track. However, Fed tapering and a three-month-old ascending support line near 1.2590 could restrict short-term declines of the pair.

Read: USD/CAD drops towards 1.2600 on firmer oil, risk-on mood

Author

Anil Panchal

FXStreet

Anil Panchal has nearly 15 years of experience in tracking financial markets. With a keen interest in macroeconomics, Anil aptly tracks global news/updates and stays well-informed about the global financial moves and their implications.

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