Bank of Japan Warns of Regional Economic Risks Amid Middle East Conflict and Rising Oil Prices 
Australia Bans Card Payment Surcharges Starting October 2025 
ECB Warns of Rising Inflation Risks Amid Iran War Energy Shock 
Bank of America Maintains Forecast for Two Fed Rate Cuts in 2026 Despite Inflation Risks 
Urban studies: Doing research when every city is different 
South Korea Central Bank Signals Cautious Policy Amid Inflation and Middle East Tensions 
RBNZ Holds Rates at 2.25% as Middle East Conflict Fuels Inflation Concerns 
DOJ Ends Probe Into Fed Chair Jerome Powell, Boosting Kevin Warsh Confirmation Prospects 
2025 Market Outlook: Key January Events to Watch 
RBI Holds Interest Rates Steady Amid Middle East Tensions and Global Uncertainty 
Gold Prices Slide as Rate Cut Prospects Diminish; Copper Gains on China Stimulus Hopes 
Oil Prices Dip Slightly Amid Focus on Russian Sanctions and U.S. Inflation Data 
U.S. Treasury Yields Expected to Decline Amid Cooling Economic Pressures 
Singapore Tightens Monetary Policy Amid Middle East War Inflation Risks 
Citigroup Delays Fed Rate Cut Forecast Amid Strong Jobs Data and Inflation Concerns 
Gold Prices Fall Amid Rate Jitters; Copper Steady as China Stimulus Eyed 
Although the Bank of Canada sees an overheated housing market and rapidly rising prices as significant financial sector vulnerabilities, Governor Poloz has said that the policy rate is too blunt a tool to try to mitigate household sector imbalances. Macro prudential tools are better suited to cushion the risk and the Bank can best contribute to a soft landing in the housing by ensuring that the economy grows and inflation returns sustainably to the Bank’s target.
Since the Bank of Japan’s (BoJ) last meeting JPY crosses are under pressure, USDJPY has been keeping above the 100 mark. That makes one thing clear: the announcement of a “comprehensive assessment” of its monetary policy on the part of the BoJ fuelled the expectation of further expansionary measures and has thus been able to stop JPY’s appreciation trend recorded since the start of the year.
The central bank of Japan is likely to maintain its pledge of raising the monetary base, the outcome of Wednesday’s BoJ meeting is highly uncertain but those expecting a step-change in policy are set to be disappointed.
The Japanese Yen finished last week lower against the majority of G10 FX as traders react to the BoJ & Fed this week.
CADJPY spot is likely to approach supports at 76.718 levels and as a result CFDs of this pair slightly have been drifting down.
Hedging Framework:
The implied volatility of 1W CADJPY ATM contracts 15.64%.
3-Way Options straddle versus Call
Spread ratio: (Long 1: Long 1: Short 1)
Rationale: Since ATM IVs are trading 15.64%, shorting expensive OTM or ATM calls during bearish situations with shorter expiries would likely result in positive cash flow on expiration. As a result, we capitalize on such beneficial instruments and deploy in our strategy.
How to execute:
Go long in CADJPY 1M at the money delta put, Go long 1M at the money delta call and simultaneously, short 1M (1%) out of the money call with positive theta.
If one is bearish to very bearish, then one can even eye on writing ATM or ITM calls as well as an alternative to shorting the underlying spot FX.
