AUD/USD has had a roller coaster ride today. After closing in NY at 0.8168, the pair has traded a whopping 0.8088-8373 range; near on 300 points . We now find ourselves 150 points down from the intraday high and looking decidedly ordinary.
Whilst some blame today’s move on the RBA checking prices in the Asian morning – rubbish – the real culprit remains risk deduction. AUD/USD positions were extended across the board. AUD/JPY fell 8% at one stage yesterday and ricochet back over 4% today. Ditto EUR/AUD.
Option traders say players are covering themselves through the options market and paying up to 25% for volatilty which can normally be purchased for less than half that price.
I don’t have a firm view on where it is headed but I would be a seller on rallies near 84 cents on the expectation that a move to 85 cents would see the topside out.
