Traders bought one-week Australian dollar calls against the U.S. dollar Wednesday after one-week implied volatility rose by a percentage point in one day to 15%, to bet on an anticipated rise in the Aussie dollar. The rise in vol, in anticipation of Wednesday's 50 basis point interest-rate cut by the U.S. Federal Reserve, was expected to continue, said traders in Sydney and Melbourne. The Reserve Bank of Australia is not expected to cut interest-rates as aggressively when it meets tomorrow. This should help the Aussie dollar appreciate against the greenback, they said.
The calls were struck at AUD0.5530-AUD0.5630 while spot closed at AUD0.5465 Wednesday, and had risen to AUD0.5518 by Thursday morning, traders said. One noted that the Aussie dollar likely will continue to appreciate after breaching the technical resistance level of AUD0.55. It had hovered between AUD0.5420-0.5460 through most of the previous week, they said. Most of the deals had a notional size of some AUD50 million, although volumes were fairly low, he said.
