Kazakhstan Central Bank Holds Interest Rate at 18% as Inflation Pressures Persist 
Lithium Market Poised for Recovery Amid Supply Cuts and Rising Demand 
BOJ’s Noguchi Calls for Cautious, Gradual Interest Rate Hikes to Sustain Inflation Goals 
Indonesia Aims to Strengthen Rupiah as Central Bank Targets 16,400–16,500 Level 
Trump’s "Shock and Awe" Agenda: Executive Orders from Day One 
Stock Futures Dip as Investors Await Key Payrolls Data 
European Stocks Rally on Chinese Growth and Mining Merger Speculation 
Fed Rate Cut Odds Rise as December Decision Looks Increasingly Divided 
Oil Prices Dip Slightly Amid Focus on Russian Sanctions and U.S. Inflation Data 
BOJ Governor Ueda Meets Key Ministers as Markets Eye Policy Shifts Under New Leadership 
US Gas Market Poised for Supercycle: Bernstein Analysts 
Japan’s Inflation Edges Higher in October as BOJ Faces Growing Pressure to Hike Rates 
BOK Expected to Hold Rates at 2.50% as Housing and Currency Pressures Persist 
U.S. Treasury Yields Expected to Decline Amid Cooling Economic Pressures 
Indonesia Surprises Markets with Interest Rate Cut Amid Currency Pressure 
The big picture for sterling remains generally constructive, however, the setback against the USD can be extended slightly. The political deadlock in the Brexit drama however persists, so that deeper countertrend declines can’t be excluded yet. The latter just received stronger evidence via the break below 1.2916 (minor 76.4 %) in Cable, which increased the risk of extending lower to 1.2772 levels.
OTC Updates: Negative bids for the GBPUSD risk reversals across all tenors remain intact. While positively skewed implied volatilities of 3m tenors have still stretched towards OTM put strikes. To substantiate this downside risk sentiment, risk reversals have also been signaling bearish hedging sentiments.
We reckon that the sterling should not suffer like before, but, one should not disregard the Brexit settlement risks on the other hand. The market has always ignored the fact that all the current BoE interest rate moves are due to a favorable result of the Brexit process.
Both the speculators and hedgers of GBPUSD are advised to capitalize on the abrupt price rallies for bearish risks and bidding theta shorts in short run (1m IVs) and 3m risks reversals to optimally utilize delta longs.
Strategic Options Recommendations: On hedging grounds, fresh delta longs for long-term hedging comprising of ATM instruments and OTM shorts in short-term would optimize the strategy.
So, the execution of hedging positions goes this way: Short 1m (1%) OTM put option (position seems good even if the underlying spot goes either sideways or spikes mildly), simultaneously, initiate longs in 3m ATM -0.49 delta put options. A move towards the ATM territory increases the Vega, Gamma, and Delta which boosts premium.
Thereby, the above positions address both upswings that are prevailing in the short run and bearish risks in the long run by delta longs. Courtesy: Sentrix & Saxo
Currency Strength Index: FxWirePro's hourly GBP spot index is inching towards 81 levels (which is bullish), and hourly USD spot index has bearish index is creeping at -132 (bearish) while articulating (at 08:17 GMT).
For more details on the index, please refer below weblink: http://www.fxwirepro.com/currencyindex
