USD/CAD grinds higher after refreshing the 26-month peak to 1.3530, near 1.3510 during early Thursday morning in Europe. In doing so, the Loonie pair traces the options market signals amid the risk-averse markets.
One-month risk reversal (RR) on USD/CAD, a measure of the spread between call and put prices, remained unchanged for Wednesday, after rising the most in one week the previous day, per the options market data from Reuters. It should be noted that the weekly RR remains positive but marks a softer figure of 0.084 versus 0.158 prior.
A call option gives the holder the right but not the obligation to buy the underlying asset at a predetermined price on or before a specific date. A put option represents a right to sell.
It's worth noting that the USD/CAD traders’ previous optimism could be linked to the hawkish Fed action while the latest inaction appears to take clues from firmer oil prices, Canada’s biggest export item.
Also read: USD/CAD refreshes 26-month top near 1.3485 as Fed propels USD, oil weakens
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