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Jan 23 - 08:55 AM

EUR/USD - Options Can Influence EUR/USD More Than Friday's EZ PMI

By Richard Pace  —  Jan 23 - 06:55 AM

• German and EZ PMI data is due on Friday, potentially market moving

• Overnight options expire 10-am New York/14GMT Fri and now include the data

• However, additional volatility risk premium limited - expected tame reaction

• Overnight expiry EUR/USD implied volatility opened 13.0 Thurs from 12.0 Mon

• Premium/break-even 52 USD pips to 56 USD pips - negligible and already lower

• EUR/JPY vol may offer better value as it also includes Friday's BoJ decision

• Big option expiries and related hedging may have more effect on EUR/USD

• 3.3 billion euros of 1.0400-05 strikes expire at 10am New York Thursday

• Friday has massive 7 billion euros between 1.0350-1.0400 to underpin/contain
EUR/USD option strike expiries Jan. 23 and 24


Overnight expiry EUR/USD implied volatility


(Richard Pace is a Reuters market analyst. The views expressed are his own)

Source:
London Stock Exchange Group | Thomson Reuters

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