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AUDUSD Options Pricing in Muted Price Movement Week of RBA Meeting

AUDUSD Options Pricing in Muted Price Movement Week of RBA Meeting

2017-10-02 12:24:00
Paul Robinson, Strategist
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What’s inside:

  • RBA rate decision at 3:30 am GMT time, expected to hold at 1.5%
  • One-week implied volatility subdued at 7.85%
  • Projected weekly low at significant support

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In the following table, you’ll find implied volatility (IV) levels for major USD-pairs looking out over the next one-day and one-week time-frames. Using these levels, we’ve derived the range-low/high prices from the current spot price within one-standard deviation for specified periods. Statistically speaking, there is a 68% probability that price will remain within the lower and upper-bounds.

AUDUSD Options Pricing in Muted Price Movement Week of RBA Meeting

AUDUSD one-week implied volatility at 7.85% ahead of RBA, projects a weekly range of 7729-7899, with support at range-low

Tomorrow, the RBA will announce its decision on rates at 3:30 am GMT time, with the central bank expected to remain on hold at 1.5%. As is often the case it will be about the policy statement and projected path for monetary policy.

One-week implied volatility is at a relatively subdued level of 7.85%, suggesting we will see limited price movement over the course of the next few days. There is of course room for a surprise with tomorrow’s events but the market isn’t anticipating anything which will shake things up too much. Of interest, is the confluence between the projected one-week range-low of 7729 and solid support in the same area as far back as August 2016. With there being good confluence between projected price movement and support it appears likely we will see a hold of support should AUDUSD trade down to that point, at least on any initial test.

Looking higher, there isn’t any particular alignment between resistance and price levels. Giving the path of least resistance in the near-term (lower) it may be difficult for aussie to exceed the projected range-high of 7899 with conviction.

For other currency volatility-related articles please visit the Binaries page.

AUDUSD: Daily

AUDUSD Options Pricing in Muted Price Movement Week of RBA Meeting

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---Written by Paul Robinson, Market Analyst

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