USD/CAD: Risk reversal drops the most in two weeks

Anil Panchal FXStreet

One-month risk reversal on USD/CAD, a measure of the spread between call and put prices, turns red for the first time in over a week, not to forget marking the heaviest bearish bias since May 20, according to data source Reuters.

A call option gives the holder the right but not obligation to buy the underlying asset at a predetermined price on or before a specific date. A put option represents a right to sell. That said, the difference between them slumped to -0.074 by the end of Tuesday’s trading session, per Reuters.

The recent slump in the risk reversal goes against the USD/CAD bounce marked the previous day. However, the prices have been mildly offered since early Wednesday, down 0.06% around 1.2065 by the press time of pre-European session trading.

It’s worth noting that the Loonie bears seem to consolidate the previous day’s recovery gains while also ignoring a pullback in WTI prices. Moving on, USD/CAD traders may keep their eyes on the weekly oil inventory reports and the US dollar moves for fresh impulse ahead of Friday’s key employment report.

Author

Anil Panchal

FXStreet

Anil Panchal has nearly 15 years of experience in tracking financial markets. With a keen interest in macroeconomics, Anil aptly tracks global news/updates and stays well-informed about the global financial moves and their implications.

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