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A dovish testimony by the US Federal Reserve President Powell has boosted the odds of a 25 basis point rate cut on July 31.  

Even so, the premium claimed by USD/CNY puts (bearish bets) has dropped.  

The one-month 25 delta risk reversals on USD/CNY, a gauge of calls to puts, has jumped to -0.05 from -0.35 seen on Wednesday ahead of Powell’s testimony.  

The uptick represents the drop in the implied volatility premium for USD/CNY put options. Infact, the gauge is now more or less neutral on USD/CNY.  

The data indicates the market is mostly done pricing the Fed rate cuts and the US Dollar may recovery the ground lost in the overnight trade.  

Risk reversals