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FX options wrap - Risk premium, USD direction, EUR/USD targets

BUZZ-FX options wrap - Risk premium, USD direction, EUR/USD targets Overnight expiry FX option implied volatility in the higher beta USD pairings was trading its biggest pre-U.S. CPI premium this year. However, Wednesday's data was basically in line with expectations and didn't prompt the excessive volatility for which options were primed. Broader FX option implied volatility has eased as the CPI risk premium was priced out and as always, is more evident in sub-one-month expiry contracts.
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Some currencies best avoided, yen chief amongst them

BUZZ-COMMENT-Some currencies best avoided, yen chief amongst them Aug 14 (Reuters) - Positive conditions in financial markets and expected changes in central bank policies will put increasing pressure on the currencies of nations that have low interest rates, and the yen should suffer the worst. Stock booms and central banks easing policy rates will encourage speculation which may support carry trades.
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U.S. CPI warnings for FX as options trade 2024 highs

BUZZ-COMMENT-U.S. CPI warnings for FX as options trade 2024 highs Aug 14 (Reuters) - FX options for high beta currencies are trading their highest premiums for any U.S. CPI data so far in 2024, warning of the increased potential for the data to generate significant FX realised volatility. FX volatility is a key, yet unknown component of an FX option premium, so dealers use implied volatility as a stand-in.
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Stock boom may encourage FX traders to gamble

BUZZ-COMMENT-Stock boom may encourage FX traders to gamble Aug 14 (Reuters) - Stocks may boom on the back of stimulus derived from a U.S. policy easing cycle and a weaker dollar , encouraging FX traders to gamble. Stocks are rallying ahead of the expected start of the easing cycle in September, after recent substantial corrections which saw MSCI's world equity index reach the perfect spot for its bull trend to be resumed.
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Yen remains weak, dollar slips as markets await US CPI data

FOREX-Yen remains weak, dollar slips as markets await US CPI data Updates as of 10:16 a.m. EDT By Laura Matthews and Harry Robertson NEW YORK/LONDON, Aug 13 (Reuters) - The yen remained weak for a second straight day on Tuesday and the dollar softened against the rest of its peers in calmer trading, as markets await U .S. inflation data that could indicate the outlook for Federal Reserve interest rate cuts.
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Yen slips in newfound calm while sterling climbs after jobs data

FOREX-Yen slips in newfound calm while sterling climbs after jobs data Updates prices at 1150 GMT By Harry Robertson LONDON, Aug 13 (Reuters) - The yen slipped for a second day on Tuesday as calmer trading conditions prevailed before U.S. inflation data, while the pound rose after figures showed the British unemployment rate unexpectedly fell in June.
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Overbought dollar isn't over owned and that's crucial

BUZZ-COMMENT-Overbought dollar isn't over owned and that's crucial Aug 13 (Reuters) - Although the dollar is pushing toward overbought territory, it is doing so while few are betting on a rise , and investment in the U.S. currency - which brought its rally to an abrupt halt in 2022 - has probably been much reduced. This is crucial as without the restraint of speculation and investment the dollar is freer to rise and its long-term appreciation may go beyond the highs seen almost two years ago.
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Yen slips in newfound calm while sterling climbs after jobs data

FOREX-Yen slips in newfound calm while sterling climbs after jobs data Updates at 0825 GMT By Harry Robertson LONDON, Aug 13 (Reuters) - The yen fell for a second day on Tuesday as calmer trading conditions prevailed before U.S. inflation data, while the pound rose after figures showed the British unemployment rate unexpectedly fell in June. Currency markets have been rocked by a sharp rally in the yen since July that has prompted - and been driven by - an unwinding of a highly popular investmen
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Dollar tenses for data verdict on rate cut risks

FOREX-Dollar tenses for data verdict on rate cut risks Updates at 0450 GMT By Wayne Cole SYDNEY, Aug 13 (Reuters) - The dollar was in limbo on Tuesday as investors waited to see how U.S. economic data affected the chance of outsized rate cuts, while a rally in Japanese stocks helped staunch the bleeding in yen carry trades. The greenback rose 0.33% to 147.72 yen JPY=EBS , having briefly touched a one-week high of 148.23 overnight before profit-taking emerged.
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What is the Chinese yuan carry trade and how is it different from the yen's?

EXPLAINER-What is the Chinese yuan carry trade and how is it different from the yen's? By Winni Zhou and Summer Zhen SHANGHAI/HONG KONG, Aug 13 (Reuters) - A global markets sell-off spurred by an unwinding of yen-funded carry trades has turned the spotlight on China's yuan, which is also used widely as a cheap funding currency. While August has seen the yuan CNY=CFXS rise sharply by 2% against the dollar, traders say yuan carry trades are distinct and unlikely to unravel anytime soon.
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Dollar tenses for data verdict on rate cut risks

FOREX-Dollar tenses for data verdict on rate cut risks By Wayne Cole SYDNEY, Aug 13 (Reuters) - The dollar was in limbo on Tuesday as investors waited to see how U.S. economic data affected the chance of outsized rate cuts, while a rally in Japanese stocks helped staunch the bleeding in yen carry trades. The greenback was idling at 147.17 yen JPY=EBS , having briefly touched a one-week high of 148.23 overnight before profit-taking emerged.
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Yen dips, markets stabilize ahead of US inflation data

FOREX-Yen dips, markets stabilize ahead of US inflation data Recasts first paragraph, 4, 6, 16-17; changes date, previous NEW YORK/LONDON By Laura Matthews NEW YORK, Aug 12 (Reuters) - The yen fell against the dollar on Monday in calmer currency market trading as investors weighed the odds of a deep Fed interest rate cut next month ahead of a slew of U.S.
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Yen dips, markets stabilise ahead of US inflation data

Yen dips, markets stabilise ahead of US inflation data Updates prices throughout and byline; adds analysts comments in paragraphs 4, 6-7; changes dateline, previous LONDON/SINGAPORE By Laura Matthews and Iain Withers NEW YORK/LONDON, Aug 12 (Reuters) - The yen fell against the dollar on Monday in calmer currency market trading after volatile moves last week, while investors weighed the odds of a deep Fed interest rate cut next month ahead of a slew of U.S.
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Yen dips, markets stabilise ahead of US inflation data

FOREX-Yen dips, markets stabilise ahead of US inflation data Updates at 1124 GMT By Iain Withers and Vidya Ranganathan LONDON/SINGAPORE, Aug 12 (Reuters) - The yen fell against the dollar on Monday in calmer currency market trading after volatile moves last week, while investors weighed the odds of a deep Fed rate cut next month ahead of a slew of U.S.
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Dollar may be supported throughout an easing cycle

BUZZ-COMMENT-Dollar may be supported throughout an easing cycle Aug 12 (Reuters) - The dollar may be supported throughout an easing cycle, which should boost investors' will to take risk - fuelling demand for a liquid and safer asset that should still be underpinned by one of the highest interest rates for a major currency when the cycle is over. While the U.S.
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Stand-out FX option strike expiries for the week ahead

RPT-BUZZ-COMMENT-Stand-out FX option strike expiries for the week ahead Repeats with no changes Aug 9 (Reuters) - The cash hedging of soon-to-expire FX option strikes can have a magnetic effect on FX price action and add to nearby support/resistance. There are some large strikes worth noting for the week ahead. EUR/USD strikes expire on Monday at 1.0900 on 1.3 billion euros ($1.42 billion) and Tuesday at 1.0865-75 on 1.4 billion euros and 1.0900 on 1.7 billion euros.
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Stand-out FX option strike expiries for the week ahead

RPT-BUZZ-COMMENT-Stand-out FX option strike expiries for the week ahead Repeats with no changes Aug 9 (Reuters) - The cash hedging of soon-to-expire FX option strikes can have a magnetic effect on FX price action and add to nearby support/resistance. There are some large strikes worth noting for the week ahead. EUR/USD strikes expire on Monday at 1.0900 on 1.3 billion euros ($1.42 billion) and Tuesday at 1.0865-75 on 1.4 billion euros and 1.0900 on 1.7 billion euros.
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Dollar dips as yen heads for first weekly drop in six

FOREX-Dollar dips as yen heads for first weekly drop in six Updates at 1851 GMT By Hannah Lang NEW YORK, Aug 9 (Reuters) - The dollar was off a one-week high against other major currencies on Friday, capping off a turbulent few days as traders digested a drop in U.S. jobless claims and the prospect of a looming economic downturn. The U.S. currency was down against the Japanese yen JPY=EBS following a three-day rebound, as Thursday's firmer-than-expected employment data spurred a paring back in b
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Dollar dips as yen heads for first weekly drop in six

FOREX-Dollar dips as yen heads for first weekly drop in six Updates at 1445 GMT By Hannah Lang and Kevin Buckland NEW YORK/TOKYO, Aug 9 (Reuters) - The dollar was off a one-week high against other major currencies on Friday, capping off a turbulent few days as traders digested a drop in U.S. jobless claims and the prospect of a looming economic downturn.
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FX options wrap - Adjusting for calm before possible data storm

BUZZ-FX options wrap - Adjusting for calm before possible data storm There have been some significant changes in FX option premiums over recent sessions amid the strong shifts in risk appetite and unwinding of carry trades. Implied volatility spiked to new longer-term highs across the board on Monday and despite the subsequent setbacks, it remains above prior levels.
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