Price action reflects a broader lack of FX conviction, but worries are simmering about further bouts of risk aversion.
Implied volatility is low, even for those expiries that fall just after this week's main events, which include Friday's U.S. jobs, but other expiry dates hold a premium to historic volatility - their fair value measure.
Overnight (Tuesday) expiry AUD/USD option implied volatility is far from excessive and suggests a limited FX reaction to Tuesday's Reserve Bank Australia policy announcement, although the rest of the curve, and AUD put premiums, remain well supported. nL1N2P90JI
The Bank of England is unlikely to deviate from the recent policy path on Thursday, which should limit any GBP volatility and weigh further on implied volatility, making a potential 5:1 return from betting against 1.38, and 1.40 trading over the next week, seem attractive. nL1N2P90PC
Plenty of big option expiries may help dictate price action in the current environment, the largest of which are the mid 1.18's in EUR/USD. nL1N2P90FF EUR/USD risk reversals reflect the lack of any directional bias. nL1N2P90DJ
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