A key option market metric shows investors are adding bets to position for gains in the USD/CAD pair.
One-month risk reversals, a gauge of calls to puts, crossed above zero on Monday, indicating higher demand for call options (bullish bets) compared to put options (bearish bets). The metric rose to 0.262 on Tuesday, the highest level since Sept. 3.
Notably, risk reversals have surged in a near 90-degree manner from -0.21 to 0.262 in the last five days. Clearly, the sentiment has turned bullish (or CAD-bearish).
The USD/CAD pair is currently trading at 1.3280, having failed to put in a daily close above 1.33 for the second day on Tuesday.
However, if risk reversals are a guide, the pair could challenge recent highs near 1.3330.
Risk reversals
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