Please note that AUDUSD OTC functions have been intensified ahead of data announcements in this week, you could observe that 1w IVs are bolstered as Fed’s minutes, US unemployment claims, Non-manufacturing PMIs, Aussie and US trade balances are the major data focuses that could stimulate volatilities in both AUDUSD spot and derivatives markets.
Medium-term outlook: This APAC pair is likely to remain well below 0.7305 levels. More slumps are on the cards below 0.71 levels amid minor spikes. The US dollar has had an impressive rise since the US election and has a potential to rise further during the months ahead. The Fed’s assertive tightening projections plus US fiscal expansion should maintain upside pressure on US interest rates and the US dollar.
Against that coal and iron ore are likely to sustain a good portion of their dramatic rises, and economic data should improve in Q4 and Q1, but these forces are subservient to the US dollar’s trend. There’s also the issue of Australia’s AAA rating, seen at risk.
While delta risk reversal reveals divulge more interests in hedging activities for downside risks. As a result, we can understand ATM puts have been costlier where the spot FX market direction of this pair is heading towards 0.71 or below technical levels. So, the speculators and hedgers for bearish risks are advised to optimally utilize the upswings and bid on 1-3m risks reversals.


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