Urban studies: Doing research when every city is different 
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EUR risk short-lived: The recent tightening of the spread is essentially due to the political risk premium in Europe, which is currently supporting EUR vols. Our central scenario sees Marine Le Pen failing to win the French presidential election and a euro bounce accompanied by a deflating of the EUR volatility premium.
The G10 convergence trade: long EURAUD
The AUD has performed the most and the EUR the least against the USD since the start of the year: long EURAUD is a natural G10 convergence trade.
AUD strength is at risk, as the surge in metal prices may not be sustainable.
The EUR could take a breather if French pre-election uncertainty has passed its peak.
We like selling the EURAUD high vol risk premium conditionally on a bullish pay-off.
Trade a tactical bounce via a 2m zero cost ladder strikes 1.38/1.39/1.42.
Recommendation: Buy EURAUD 2m ladder strikes 1.38/1.39/1.42, zero cost (indicative offer, spot ref: 1.3778) Trade risks: unlimited above 1.43.
The ladder structure is a standard call spread strikes 1.38/1.39 fully financed by a call strike 1.42. Investors, therefore, face unlimited risk if EURAUD trades above 1.43 at the 2m expiry and may have to delta-hedge the position.
