• Market pricing 16bps of rate cuts by the RBA on Feb 18, 78bps entire 2025

• Wednesday's Aus CPI data likely key to that Feb 18 cut, so keenly eyed

• However, latest AUD/USD weakness due to the latest Trump tariff threats

• Spot setback lifted FX option implied volatility to increase option premium

• Overnight implied volatility gets CPI data - implied volatility 13.0 to 15.0

• Premium/break-even for straddle is 30 to 35 USD pips either direction

• 1-month expiry implied volatility 9.5 to 9.9 Tues, fell 11.0 - 9.0 last week

• Big AUD/USD option expiries between 0.6200-0.6300 Tuesday
AUD/USD FXO implied volatility

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