This article was published on the 21st of November, 2023.

1011 ET – The dollar weakness extends into its fourth consecutive day, with the WSJ Dollar Index down 0.3%. Again, the Japanese yen is a top gainer, as the USDJPY cross falls as low as 147 from a high of 152 just a few weeks ago. The greenback is also losing ground to the euro and the pound. Deutsche Bank economists note that fedspeak is turning more dovish. Fed communications, they say in a report, “reinforced our view that the likelihood of a December hike is very low and we have reached the end of hiking cycle,” although officials will keep their options open. Fed minutes are due later today. (paulo.trevisani@wsj.com; @ptrevisani)

GBP/USD Options Look Cheap, Societe Generale Says

0610 ET – As sterling rises, options betting on it rising have barely moved and they look cheap, Societe Generale options strategist Olivier Korber says in a note. GBP/USD realized volatility—a measure of past movements—is “surging with the faster pace of dollar moves.” However, GBP/USD implied volatility—which measures expected moves based on options pricing—hasn’t reacted, leading to a “large negative vol risk premium.” Korber advises buying a GBP/USD two-month one-touch option, with a knock-in at 1.31, a bet which would pay out if GBP/USD hit that level within two months. GBP/USD two-month implied volatility trades at 6.878%, having traded above 8% in late October, according to Refinitiv. GBP/USD rises to a 10-week high of 1.2554, according to FactSet.

Read further: The Wall Street Journal