Summer Lulls And Rate Gaps Dominate Vols

OPTION VOLATILIES

The USD is trading lower this morning as thin liquidity conditions continue to prevail.  EUR is benefiting from further anticipated rate hikes by the ECB while it is largely viewed that the Fed will continue to keep rates at 5.25% especially after last weeks tame inflation report.  Chinas central bank raised their key interest rates by 0.27% on Friday, putting a damper on Asian equity markets and boosting the Japanese Yen. 

Volatilites remain quiet and unchanged from last week. 

OPTION TRADE IDEAS

Below please find some strategies, which depending on your view might be applicable.  Please bear in mind that all of these trades can be applied to any of the currency pairs, which may be traded.  All barrier levels, strikes, triggers, payouts, and maturity dates can be tailored to each individuals views.

View: USD/JPY will continue to depreciate
Trade:  Purchase a 1 week EUR/USD One Touch Option

View:  The AUD/USD will remain range-bound this week
Trade:  Purchase a 1 week AUD/USD Double No Touch option