Search ForexCrunch

One-month risk reversal on  USD/CAD, a measure of the spread between call and put prices, regains put (bearish) bias with a drop to -0.061 from +0.148 seen on March 24 versus -0.1000 flashed on March 11, 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.  

The latest pullback in the risk reversal suggests investors are trimming the bets to position for a rise in USD/CAD (or weakness in the Canadian dollar).  The reason could well be traced from WTI’s recovery moves.

At press time, USD/CAD bounces off an intraday low of 1.2572 despite keeping the previous day’s pullback moves from 1.2609.