• USD/JPY option implied volatility fell after U.S. China trade talks

• All expiry dates almost completely reversing post tariff rally from 2 April

• However, it met renewed demand beside implied volatility in other pairs Tues

• More gains Wed as USD/JPY extends setback from Mons 148.65 recovery peak

• 1-month implied volatility now 10.7 from 10.0 in Asia and 9.5 on Monday

• Risk reversals increased premium for downside vs upside strikes (chart)

• News of U.S./S.Korea talks on FX said to be aiding latest USD/JPY drop
USD/JPY FXO implied volatility


USD/JPY FXO risk reversals

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