U.S. Treasury Yields Expected to Decline Amid Cooling Economic Pressures 
China’s Growth Faces Structural Challenges Amid Doubts Over Data 
Trump’s Iran Strategy: What Has Been Achieved After Three Months of Conflict? 
Goldman Predicts 50% Odds of 10% U.S. Tariff on Copper by Q1 Close 
S&P 500 Relies on Tech for Growth in Q4 2024, Says Barclays 
World Cup technology: from ref cams to AI analysts, cutting-edge research is changing the game 
U.S. Banks Report Strong Q4 Profits Amid Investment Banking Surge 
AI Memory Boom Sparks Global Chip Supply Crunch 
How AI prompting turned writerly description into an everyday skill 
China’s AI Manufacturing Boom Masks Weak Consumer Economy, Citi Says 
UBS Projects Mixed Market Outlook for 2025 Amid Trump Policy Uncertainty 
Today’s space race could turn fatal if we don’t agree on new rules 
Gold Prices Slide as Rate Cut Prospects Diminish; Copper Gains on China Stimulus Hopes 
The pound slipped to a fresh one-month low against the U.S. dollar on Wednesday, despite the release of upbeat U.K. data as investors remained cautious ahead of the Federal Reserve’s policy decision due later in the day.
While USDJPY dropped to the nearly one-month lows after the BoJ mentioned earlier today that it was abandoning its target to increase the monetary base and left interest rates unchanged at minus 0.1%.
For now, the dollar traders turned out to be on the defensive mode as the focus shifted on Fed’s monetary policy meeting.
If you look in for buying USDJPY calls and GBPUSD puts simultaneously, and if the current positive correlation holds, at least one would go in the right direction.
It turns out that the skew in both pairs is offering interesting pricing conditions for regular knock-in (KI) options. The KI levels are set to obtain activation probabilities of about 70%.
The sum of the two exotic premiums (trading both scenarios conditionally - probability about 70%) is smaller than the cheapest vanilla (trading the GBP scenario unconditionally).
Risks: No activation
Buy USDJPY 2m call strike 103 knock-in 98.50, indicative offer: 0.27% (vs 1.16% for the vanilla call, spot ref: 100.736).
Buy GBPUSD 2m put strike 1.2840 knock-in 1.3150, indicative offer: 0.30% (vs 0.76% for the vanilla put, spot ref: 1.2981).
Investors buying knock-in options cannot lose more than the premium initially invested. However, the USDJPY call and the GBPUSD put will be activated only if their respective underlying FX rates hit 98.50 and 1.3150 on expiry.
