European Stocks Rally on Chinese Growth and Mining Merger Speculation 
Wall Street Analysts Weigh in on Latest NFP Data 
UBS Predicts Potential Fed Rate Cut Amid Strong US Economic Data 
US Futures Rise as Investors Eye Earnings, Inflation Data, and Wildfire Impacts 
Energy Sector Outlook 2025: AI's Role and Market Dynamics 
China's Refining Industry Faces Major Shakeup Amid Challenges 
Mexico's Undervalued Equity Market Offers Long-Term Investment Potential 
Gold Prices Slide as Rate Cut Prospects Diminish; Copper Gains on China Stimulus Hopes 
Goldman Predicts 50% Odds of 10% U.S. Tariff on Copper by Q1 Close 
U.S. Stocks vs. Bonds: Are Diverging Valuations Signaling a Shift? 
Moody's Upgrades Argentina's Credit Rating Amid Economic Reforms 
Moldova Criticizes Russia Amid Transdniestria Energy Crisis 
UBS Projects Mixed Market Outlook for 2025 Amid Trump Policy Uncertainty 
2025 Market Outlook: Key January Events to Watch 
Trump’s "Shock and Awe" Agenda: Executive Orders from Day One 
Stock Futures Dip as Investors Await Key Payrolls Data 
U.S. Treasury Yields Expected to Decline Amid Cooling Economic Pressures 
AUDUSD bulls, in the short-run, show some minor support at 0.7170-80 region, however, the pair appears to be vulnerable given the risk averse mood globally.
The medium-term perspective: Australia’s poor GDP data was a notable setback to the domestic story but aside from forecast adjustment in Feb, the RBA is unlikely to change its tune, limiting AU yield downside. Commodity prices suggest AUD should be 0.7350 - 0.7400 levels but a very sour global risk environment will cap rallies. If the Fed enters 2019 still planning hikes, AUDUSD should head back to 0.69-0.70 levels in Q1 2019.
OTC outlook and Hedging Perspectives (AUDUSD):
Before proceeding further into the strategic framework, ahead of RBA's monetary policy minutes and Federal Reserve's hikes that are sheduled for next week, let’s just quickly glance through the positively skewed IVs of 3m tenors signify the hedgers’ interests to bid OTM put strikes upto 0.70 levels which is in line with above projections (refer above nutshell). While positive shift in risk reversals of short-term tenors are in sync with momentary upswings in the underlying spot fx, bearish delta risk reversal across all tenors also substantiate that the hedging activities for the downside risks, refer 2nd (RR) nutshell.
Accordingly, we have advocated delta longs for long term on hedging grounds, more number of longs comprising of ITM instruments and capitalizing on prevailing rallies and shrinking IVs in 1m tenors, theta shorts in short-term to optimize the strategy.
Theta shorts in OTM put option would go worthless and the premiums received from this leg would be sure profit.We would like to hold the same option strategy as stated above on hedging grounds. Thereby, deep in the money put option with a very strong delta will move in tandem with the underlying.
The execution of hedging strategy:Short 1m (1%) OTM put option with positive theta (position seems good even if the underlying spot goes either sideways or spikes mildly), simultaneously, add long in 2 lots of delta long in 3m (1%) ITM -0.79 delta put options. A move towards the ATM territory increases the Vega, Gamma and Delta which boosts premium. Courtesy: JPM, Sentrix and Saxo
Currency Strength Index:FxWirePro's hourly AUD spot index is inching towards 13 levels (which is neutral), hourly USD spot index was at 122 (bullish), while articulating (at 08:55 GMT).
For more details on the index, please refer below weblink: http://www.fxwirepro.com/currencyindex
