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Options traders bet on Euro gains against the US dollar and drop against the Pound
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Loading...As euro traders await this week's big risk events — tomorrow's Fed decision and Sunday's German election — the options market shows a growing divergence in short-term sentiment on the common currency versus its major peers.
The optimistic turn in euro sentiment against the dollar may reflect options traders' doubts that the Fed will do much to lift the greenback this week, Bloomberg strategist Vassilis Karamanis argues. That view is also helped by expectations Merkel will clinch victory in this weekend's German election, and the composition of the ensuing governing coalition will be something to worry about further down the road.
On the flipside, the pound gets the upper hand versus the euro as investors brace for rate hikes in the U.K. While sterling has pared some of its gains since last week's BOE rate decision, that's yet to show up in options bets on the currency.
Source: Bloomberg Pro Terminal
Trader Nikolay Georgiev
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