FX

USD/CAD: Risk reversal drops the most in two weeks

One-month risk reversal on USD/CAD, a measure of the spread between call and put prices, turns red for the first time in over a week, not to forget marking the heaviest bearish bias since May 20, according to data source Reuters. 

A call option gives the holder the right but not obligation to buy the underlying asset at a predetermined price on or before a specific date. A put option represents a right to sell. That said, the difference between them slumped to -0.074 by the end of Tuesday’s trading session, per Reuters.

The recent slump in the risk reversal goes against the USD/CAD bounce marked the previous day. However, the prices have been mildly offered since early Wednesday, down 0.06% around 1.2065 by the press time of pre-European session trading.

It’s worth noting that the Loonie bears seem to consolidate the previous day’s recovery gains while also ignoring a pullback in WTI prices. Moving on, USD/CAD traders may keep their eyes on the weekly oil inventory reports and the US dollar moves for fresh impulse ahead of Friday’s key employment report.

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