US Futures Rise as Investors Eye Earnings, Inflation Data, and Wildfire Impacts 
Indonesia Surprises Markets with Interest Rate Cut Amid Currency Pressure 
Japan Declines Comment on BOJ’s Absence From Global Support Statement for Fed Chair Powell. Source: Asturio Cantabrio, CC BY-SA 4.0, via Wikimedia Commons 
RBA Expected to Raise Interest Rates by 25 Basis Points in February, ANZ Forecast Says 
China Holds Loan Prime Rates Steady in January as Market Expectations Align 
Bank of Canada Holds Interest Rate at 2.25% Amid Trade and Global Uncertainty 
Wall Street Analysts Weigh in on Latest NFP Data 
Mexico's Undervalued Equity Market Offers Long-Term Investment Potential 
Bank of England Expected to Hold Interest Rates at 3.75% as Inflation Remains Elevated 
New York Fed President John Williams Signals Rate Hold as Economy Seen Strong in 2026 
Thailand Economy Faces Competitiveness Challenges as Strong Baht and U.S. Tariffs Pressure Exports 
Bank of America Posts Strong Q4 2024 Results, Shares Rise 
Fed Confirms Rate Meeting Schedule Despite Severe Winter Storm in Washington D.C. 
Moody's Upgrades Argentina's Credit Rating Amid Economic Reforms 
Geopolitical Shocks That Could Reshape Financial Markets in 2025 
Oil Prices Dip Slightly Amid Focus on Russian Sanctions and U.S. Inflation Data 
South Korea Vows Action to Stabilize Won as Currency Weakens Despite Strong Fundamentals 
1W and 1M ATM IVs of GBPJPY are rising in OTC markets, flashing a tad below 13% and 12.29% respectively on the BoJ’s monetary policy.
1w IV skews are equally interested in both OTM calls and OTM puts, while 1m skews signify the hedging interests in OTM put strikes as the BoJ shifts policy framework to targeting Japan’s yield curve.
Implied volatilities skews of ATM puts of 1m are positively correlated to the OTM strikes as the BoE governor Carney’s speech tomorrow will be the key, with the inflation report seeing expected effects from Brexit on the real economy. Markets are observing whether UK central bank hints on with another 25bp cut in Bank rate and some looking for more QE or change its easing views as PMIs of all sectors indicate the recovery in business environment observing to the previous easing in bank rates.
In spot FX of GBPJPY, although upswings were observed to hit the day highs of 133.261 soon after BOJ’s decision, technically the pair has again drifted below 7DMAs to the current 132.151 levels, what is weighing on the pound's slumps is that, the expectations on BoE monetary policy changes but the chances for lower interest rates in 2016 has grown up, above all lingering post-Brexit formalities adding an extra pressure on sterling's depreciation.
Accordingly, we think arresting potential downside risks of this pair by hedging through Put Ratio back Spread, for now, it is reckoned that the underlying currency GBPJPY to make a large move on the downside in spite of any abrupt upswings.
Hence, we advocate the suitable option strategy to hedge the potential downside risks by using any small bounces through ITM shorts, this would have certainly ensured returns in the form of premiums.
So, stay firm with longs on 2 lots of 1M At-The-Money vega puts that would function effectively in higher IV times, long instruments to generate positive cash flows as underlying spot keeps declining as you can observe the exponential positive cash inflows, whereas the maximum losses are limited regardless of spot making any upmoves (see payoff structure in diagram).
Shorts leg of 1 lot of 1W (0.5%) ITM put option would generate assured returns on any abrupt rallies and reduce hedging cost of long legs.
