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Europe takes 'risk-off' lead from Asia

Discussion in 'Fundamental Analysis' started by FXStreet_Team, Jan 15, 2016.

  1. FXStreet_Team

    FXStreet_Team Well-Known Member Trader

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    FXStreet (Bali) - Price action in the FX arena at the open of Frankfurt continues to favour 'risk off' bets, with AUD/USD having traded near 0.69 before its bounce, while USD/JPY is also depressed at session lows near 117.60.

    Shanghai selling weighs on risk

    Market aversion has intensified during China's afternoon trade, with the Shanghai extends its losses quite rapidly to currently trade around -4%. The down move in Chinese stocks has led to a healthy uptick in Gold, while SP500 futures are selling off (-0.87%), while 30-yr US bonds have caught a nice bid tone. Oil prices have also come under pressure once again, last at 30.34.

    Options pricing still reflects pessimism

    As per options positioning, the variation in the pricing of Yens and Australian Dollars vs US Dollars suggests that market makers continue quite pessimistic about the environment, given that today's USD/JPY 25 delta RR in the (J6 contact) makes the buying of Yen calls slightly more expensive compared to Thursday. The same applies for the AUD/USD, where premium being paid for puts has increased, strengthening the notion of pessimism.
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