One-month risk reversal on USD/CAD, a measure of the spread between call and put prices, dropped to the lowest levels since November 04 on Monday, per 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 daily difference between them slumped to the -0.113 level, also reversing Friday’s first positive reading in five days, heading into Tuesday’s European session, per Reuters.
The options market scenario backs the USD/CAD sellers ahead of today’s Canada GDP and Fed Chair Jerome Powell’s testimony. The reason for the bearish bias could be linked to the market’s cautious optimism on Monday.
However, the latest doubts over the vaccines’ abilities to tame the South African covid variant, dubbed as Omicron, favor USD/CAD buyers.
Against this backdrop, USD/CAD prints 0.30% intraday gains around 1.2790 by the press time.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.