Overnight expiry options now include Tuesday's Bank of Japan policy announcement and despite a broad consensus for the status-quo, increased premiums for JPYshould alert traders to than an immediate policy tweak.
FX realised volatility in the major pairings continues to trade at 2-year lows and that's keeping pressure on broader based G10 FX option implied volatility.
A lack of FX volatility premium and demand comes despite a fairly busy week in terms of central bank meetings and data, so doesn't bode well for those expecting FX .
If FX realised volatility remains subdued this week, the few larger G10 FXand their related hedging flows may have more of a bearing on FX.
Those looking for EUR/USD direction won't find any answers from risk reversal contracts.
While the downside strike premium on a 1-month expiry is at long term lows, there's been no since November 2022.
USD/CNH option implied volatility is drifting back toward.
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