Traders note a very large ($500 mln) expiry at the 100.00 level in USD/JPY at 14:00 GMT. All things being equal (are they ever?) prices tend to gravitate toward the strike price at the time of expiry. Why? Because each side of the trade has to actively hedge their exposure. At 100.00, one side has an exposure of $500 mln dollars and the other side has no exposure. At 99.99, the other side of the trade has a $500 mln exposure and the other side has zero. All the jockeying back and forth tends to draw prices close to the strike.
Traders also say there are 0.7100 expiries in AUD today and everyday for the rest of the week. Asian offers are seen on rallies in AUD. US equities have turned higher in the last few minutes, helping give AUD/USD and USD/JPY a lift.
