Bank of America Global Research flags a USD bullish signal form the FX options market.
"Cumulative put/call ratios for G10 FX vs USD suggest option investors bought more USD calls than puts in 2021 (Chart of the Day). Open interest of FX options set to expire over the next three months also confirms the option market is positioned for a stronger USD into 2022," BofA notes.
"Within the G10 complex, elevated put/call ratios and large dislocations between option and spot changes in 2021 suggest EUR, JPY, and CHF have the most room to fall vs USD. To the contrary, CAD is the only currency in G10 where the put/call ratio has turned more bullish vs USD in Q4," BofA adds.