- USD/CAD hits multi-month highs as oil takes a beating.
- Investors are adding bets to position for gains in USD/JPY, options market data shows.
The Canadian dollar is on the offer in Asia and is powering gains in the USD/CAD pair.
The currency pair rose to 1.3348 a few minutes ago to hit the highest level since Oct. 3 and was last seen trading at 1.3338, representing marginal gains on the day.
West Texas Intermediate (WTI) oil is currently trading at a 13-month low of $48.07, representing a nearly 10% drop on a week-to-date basis.
The black gold has come under pressure, possibly due to coronavirus-led risk aversion in the equity markets and seems to be weighing over the loonie. After all, oil is one of Canada’s major exports.
Call demand spikes
One-month risk reversals, a gauge of calls to puts, jumped to 0.425 on Wednesday, to hit the highest level since March 2018. The gauge has in a V-shaped manner from -0.20 to 0.425 in the last four days.
The data indicates the investors are adding bets (call options) to position for a sustained rally in the USD/CAD pair.