BOJ Rate Hike Expectations Rise Ahead of September Meeting 
Australia Inflation Cools as Core CPI Misses Forecasts, Easing RBA Rate Hike Pressure 
China Holds Loan Prime Rates Steady for 14th Month as Economic Recovery Remains Uneven 
U.S. Banks Report Strong Q4 Profits Amid Investment Banking Surge 
RBA Signals More Rate Hikes Possible as Australia Battles Stubborn Inflation 
BOJ Minutes Signal More Rate Hikes as Inflation Risks Grow 
Geopolitical Shocks That Could Reshape Financial Markets in 2025 
UBS Predicts Potential Fed Rate Cut Amid Strong US Economic Data 
Global Markets React to Strong U.S. Jobs Data and Rising Yields 
Energy Sector Outlook 2025: AI's Role and Market Dynamics 
Indonesia Surprises Markets with Interest Rate Cut Amid Currency Pressure 
European Stocks Rally on Chinese Growth and Mining Merger Speculation 
Chile Central Bank Holds Interest Rate at 4.5% as Inflation and Global Risks Persist 
Fed Holds Interest Rates Steady as Kevin Warsh Says Rising Treasury Yields Tighten Financial Conditions 
The US Federal Reserve maintained monetary policy unchanged last night, as broadly anticipated. The accompanying statement was a little more upbeat than before, noting the improvement in consumer and business sentiment. Importantly, though, there was no strong signal of a near-term hike. Domestically, the House of Commons voted to provide the government the ability to trigger Article 50 to start EU withdrawal negotiations by the end of March.
The Bank of England unanimously announces no change in policy today, leaving rates at 0.25% and the planned total stock of asset purchases at £445bn, and maintain the ‘neutral’ bias adopted in the November Inflation Report.
Notably, Governor Carney’s speech on 16 January repeated that monetary policy can respond “in either direction”, with the MPC for the moment choosing to tolerate a period of rising inflation. The data continue to bear out the UK economy’s post-referendum resilience, while further rises in inflation are coming down the tracks.
The UK would pursue a different future outside Europe, but the removal of uncertainty around the British stance should prove bearish for GBP volatility. Please be noted that the IVs of GBP crosses (especially EURGBP) has been reducing despite series data, such as the UK PMIs, BoE monetary policy. Accordingly, we’ve devised below option strategy.
Option-trade recommendations: (Writing a strangle)
For those whose foresee non-directional that is existed in this pair from the last couple of months or so to prolong in reducing IV scenario, prefer to remain in the safe zone, we recommend shorting a straddle considering IV shrinks.
Thereby, one can benefit from certain returns by shorting both calls and puts.
Thus, short 7D (0.5% OTM striking) put and (0.5% OTM striking) call simultaneously of the same expiry (preferably, short term for maturity is desired).
The strategy is likely to derive the maximum returns as long as the underlying EURGBP spot FX price on expiry keeps trading between 0.85 and 0.86 levels only as both the instruments have to wipe off worthless. So that the options trader gets to keep the entire initial credit taken as profit.
