Latest news with #SaurabhTandon
Business Times
3 days ago
- Business
- Business Times
Currency traders focus on Australian dollar and euro for bearish US dollar bets
Options traders are using currencies such as the Australian dollar and euro to express bearish US dollar views after recent disappointing American economic data. The Aussie is being supported by the Reserve Bank of Australia's 'cautious and gradual' stance on easing, as well as improving risk sentiment. The euro's allure has grown from expectations an increase in regional defence spending will support the eurozone economy, and a more hawkish-sounding European Central Bank. Meanwhile, things look rockier for the US dollar as data showed jobs growth missed expectations in July with downward revisions to prior months as well. Standard Chartered Bank has seen 'a lot of interest' in euro-US dollar and Australian dollar-US dollar call options after non-farm payrolls, according to Saurabh Tandon, global head of foreign-exchange options in Singapore. The market is now 'focusing on upcoming events' such as US inflation and the Federal Reserve's Jackson Hole symposium, he said. The rise in bullish Aussie and euro options signals growing conviction that the US dollar will weaken further, while also showing that traders are becoming more selective in positioning amid tariff risks and deteriorating data from the world's biggest economy. Some investors had begun to turn bullish on the US dollar as countries started to make trade deals with the US, and this signals a reversal of that momentum. 'Following the EU-US trade deal announcement, we saw directional demand for dollars via options, but that theme was quickly snubbed by the negative non-farm payroll revisions,' said Jamie Sanders, director of foreign-exchange options trading at RBC Capital Markets in London. The trading volume of Australian dollar call options expiring by September, which gain in value if the currency rises versus the greenback, was triple that of bearish put options on Aug 7, data from CME Group's options central limit order book showed. Euro call option volume was 77 per cent larger than that of puts that same day. National Australia Bank has seen a pickup in demand for bullish Australian dollar option wagers, as well as for those on the New Zealand dollar. 'Following the recent non-farm payrolls, we've observed significant activity in AUD/USD and NZD/USD short-dated call options, in anticipation of a busy data week, including the US CPI release and the RBA meeting.' said Con Davelis, Sydney-based head of FX options at the bank. BLOOMBERG
Yahoo
27-05-2025
- Business
- Yahoo
Hedge Funds Bet on Korean Won to Mirror Taiwan Dollar's Surge
(Bloomberg) -- Hedge funds are ramping up bets in the options market that the South Korean won will mirror the Taiwan dollar's recent rally against the greenback. NY Private School Pleads for Donors to Stay Open After Declaring Bankruptcy UAE's AI University Aims to Become Stanford of the Gulf NYC's War on Trash Gets a Glam Squad Pacific Coast Highway to Reopen Near Malibu After January Fires Dollar-won option trading volume spiked to this year's high last week, according to the Depository Trust & Clearing Corporation data, as speculation grew that Korea and the US discussed the won's direction in their currency talks. Barclays Bank Plc said there's been increased demand for put options from hedge funds. A surge in the Taiwanese dollar this month has reshaped market expectations for Asian currencies. Investors see the won as a likely candidate for comparable gains, as Korea's trade surplus with the US adds pressure on local authorities to tolerate a stronger currency. The US last year added Korea to its foreign-exchange monitoring list — which already included Taiwan. A key question 'most hedge funds have been asking is: which currency pair can have the same magnitude of move that was observed in' the Taiwan dollar, said Mukund Daga, head of foreign-exchange options for Asia at Barclays in Singapore. 'This has led to decent demand for dollar-won put options in digital and vanilla formats by fast-money names.' Vanilla options are standard contracts with no special features attached to them, while digital trades offer a fixed payout if the FX pair hits a preset level at expiration. Demand for dollar-won put options with notional sizes over $60 million outpaced call options on DTCC by a 3:2 ratio on Wednesday, underscoring the bias for bearish bets on the pair. The premium to hedge dollar-won downside over the next month compare to the upside, as measured by risk reversals, traded near a 21-year high last week. The dollar-won pair 'was already seeing active downside interest for digitals and put spreads since the big move in the Taiwan dollar a few weeks back,' said Saurabh Tandon, global head of foreign-exchange options at Standard Chartered Bank in Singapore. 'The recent FX related comments have spurred on interest in downside dollar-won trades.' The tariff talks between the US and its trading partners have raised speculation that President Donald Trump's administration is open to a weaker greenback. For many, the won is becoming a favored proxy for broader shifts in US-Asia trade dynamics and a key hedge against declining dollar strength. The won rallied last week as local media cited an unnamed government official as saying that the US believes a relatively weak local currency is a fundamental cause of Korea's trade surplus. The finance ministry has said that while FX talks with the US are ongoing, nothing has been decided yet. The Taiwan dollar's 7% surge this month has raised hedging costs for Taiwanese insurers, who are large holders of US-dollar assets. That's making the won a major proxy for hedging, according to a Bank of America note dated May 21. The 'market is showing insatiable appetite for owning optionality in the won,' said Ivan Stamenovic, head of Asia Pacific G-10 FX trading at Bank of America Corp. 'We are seeing major interest across the term structure indiscriminate of tenors. --With assistance from Jaehyun Eom and Betty Hou. Why Apple Still Hasn't Cracked AI How Coach Handbags Became a Gen Z Status Symbol Mark Zuckerberg Loves MAGA Now. Will MAGA Ever Love Him Back? Inside the First Stargate AI Data Center AI Is Helping Executives Tackle the Dreaded Post-Vacation Inbox ©2025 Bloomberg L.P. Sign in to access your portfolio
