USD/CNY risk reversals: CNY call value hit highest since April 20

The value of the Chinese yuan (CNY) call options have hit the highest level since April 20, risk reversals show.
The options market data validates the bearish view put forward by the head-and-shoulders breakdown seen in the USD/CNY chart.

Omkar Godbole FXStreet Contributor

The USD/CNY one month 25 delta risk reversals (CNY1MRR) fell to -0.063 - the lowest level since April 20, meaning the implied volatility premium for the CNY calls currently stands at a four-month high.

In simple terms, the options market has turned bullish on the Chinese currency. A similar sentiment is echoed by the technical charts. For instance, the head-and-shoulders breakdown witnessed on the 4-hour chart on Aug. 24 signaled a bullish-to-bearish trend change.

CNY1MRR

Daily chart

Author

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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