2025 Market Outlook: Key January Events to Watch 
BOJ Rate Decision in Focus as Yen Weakness and Inflation Shape Market Outlook 
U.S. Stocks vs. Bonds: Are Diverging Valuations Signaling a Shift? 
Stock Futures Dip as Investors Await Key Payrolls Data 
Gold Prices Slide as Rate Cut Prospects Diminish; Copper Gains on China Stimulus Hopes 
Mexico's Undervalued Equity Market Offers Long-Term Investment Potential 
Bank of Japan Likely to Delay Rate Hike Until July as Economists Eye 1% by September 
U.S. Banks Report Strong Q4 Profits Amid Investment Banking Surge 
Trump’s "Shock and Awe" Agenda: Executive Orders from Day One 
Lithium Market Poised for Recovery Amid Supply Cuts and Rising Demand 
ECB Signals Steady Interest Rates as Fed Risks Loom Over Outlook 
UBS Projects Mixed Market Outlook for 2025 Amid Trump Policy Uncertainty 
US Futures Rise as Investors Eye Earnings, Inflation Data, and Wildfire Impacts 
ECB’s Cipollone Backs Digital Euro as Europe Pushes for Payment System Independence 
The account of the last ECB Council meeting in early June, published today, confirms that the central is ready to ease the monetary policy stance further, without giving any hint how exactly a package of new measures might look like. The Council seems to be open to introduce a tiered rate system in the event of policy rates remaining lower for longer than currently assumed.
At the last ECB press conference on June 6th, ECB president Draghi stirred up some hope that the account of the last policy meeting might reveal some more details what exactly the ECB might decide in case of a decision in favour of further measures. In June, Draghi had stressed that the discussion among Council members at the June meeting had become "more granular in the sense that – and you'll see this in the accounts of the meeting – in the sense that several members raised the possibility of further rate cuts, ... the possibility of restarting the asset purchase programme, or further extensions in the forward guidance." Hence, it could have been expected that the account published today contains some pros and cons of specific measures.
OTC Updates: Well, ahead of these events, let’s just quickly glance at OTC outlook before looking at the options strategies.
Bullish neutral risk reversals of EURGBP have been observed to the broader bullish risk outlook in the FX OTC markets, this is interpreted as the hedgers are still keen on bullish risks but with mild downside risk sentiment in the near-term, while the pair displays 6.49-6.82% of IVs.
While positively skewed IVs of EURGBP has been balanced on either side. The bids for both OTM calls and OTM puts are seen, which means underlying hedging sentiments of spot FX are for both sides. That is why we titled it as topsy-turvy trend. This is conducive for options holders of both OTM call and put options.
You see fresh negative bids in EURGBP risk reversal numbers for the existing bullish setup, however, it should not be perceived as the bearish scenario changer. Instead, below options strategy could be deployed amid such topsy-turvy outlook.
3-way options straddle versus ITM calls are advocated seem to be the most suitable strategy for EURGBP contemplating some OTC sentiments and geopolitical aspects.
Options Strategy: The strategy comprises of at the money +0.51 delta call and at the money -0.49 delta put options of 1m tenors, simultaneously, short (1%) ITM puts of 1w tenors. The strategy could be executed at net debit but with a reduced trading cost.
Hence, on hedging as well as trading grounds, initiate above positions with a view of arresting potential FX risks on either side but slightly favoring short-term bearish risks. Courtesy: Sentrix, Saxo and Commerzbank
