China’s Growth Faces Structural Challenges Amid Doubts Over Data 
Indonesia Surprises Markets with Interest Rate Cut Amid Currency Pressure 
Mexico's Undervalued Equity Market Offers Long-Term Investment Potential 
Urban studies: Doing research when every city is different 
Gold Prices Slide as Rate Cut Prospects Diminish; Copper Gains on China Stimulus Hopes 
S&P 500 Relies on Tech for Growth in Q4 2024, Says Barclays 
Stock Futures Dip as Investors Await Key Payrolls Data 
Trump’s "Shock and Awe" Agenda: Executive Orders from Day One 
Lithium Market Poised for Recovery Amid Supply Cuts and Rising Demand 
U.S. Treasury Yields Expected to Decline Amid Cooling Economic Pressures 
European Stocks Rally on Chinese Growth and Mining Merger Speculation 
Wall Street Analysts Weigh in on Latest NFP Data 
Moody's Upgrades Argentina's Credit Rating Amid Economic Reforms 
US Gas Market Poised for Supercycle: Bernstein Analysts 
Moldova Criticizes Russia Amid Transdniestria Energy Crisis 
U.S. Banks Report Strong Q4 Profits Amid Investment Banking Surge 
China's Refining Industry Faces Major Shakeup Amid Challenges 
Despite a May-Day holiday-shortened week ahead, key for the week ahead include the FOMC decision on 2 May (while no changes to the policy setting is expected, nevertheless any indications of a dovish inclination given the upside surprise in 1Q19 growth momentum, especially since the futures market is still pricing in a rate cut by year-end, will be keenly monitored), China’s PMI and Eurozone’s 1Q GDP growth tomorrow, BOE governor Carney is also speaking. BOE policy meeting on Thursday (likely to be static, albeit possibly with Saunders as a potential dissenter, but also watch the updated economic forecasts and Carney’s comments).
Well, all these macros standpoints could propel GBPAUD either on upswings or downswings but with slightly biased southwards.
Hedging Framework:
3-Way Options straddle versus Call
Spread ratio: (Long 1: Long 1: Short 1)
The execution: Initiate long in GBPAUD 2M at the money delta put, long 2M at the money delta call and simultaneously, Short theta in 1m (1.5%) out of the money call with positive theta or closer to zero.
Rationale: Contemplating 3m IV skews that are well balanced on either side (positively skews on both OTM calls and OTM puts), we reckon that the Delta instruments are conducive to monitor directional risk so as to be aware that how much of option’s value would increase or diminish as the underlying market moves as this option tool measures the value of an option as the underlying spot FX moves. Well, higher (absolute) Delta value is desirable on the long leg in the above-stated strategy. Whereas, the Theta is positive on the short leg; as the time decay is good for an option writer (that’s why we’ve chosen narrowed expiry).
We reiterate, in the prevailing puzzled environment you could observe that the momentary bulls of GBPAUD have currently been trading in non-directionally but with some bearish pressures. Hence, we advocate the above hedging strategy with the cost-effectiveness that could hedge regardless of the swings on either side. Courtesy: Sentry
Let’s glance at the FxWirePro’s Currency Strength Index: FxWirePro's hourly AUD spot index is flashing 84 (which is bullish), while hourly GBP spot index was at shy above 108 (highly bullish) at 07:17 GMT.
For more details on the index, please refer below weblink: http://www.fxwirepro.com/currencyindex
