On a daily technical chart we get a sense of feel that this currency cross is overreacting the recently publicized Australian jobless data.On the flip side, The RBNZ early APAC trading session cut its Official Cash Rate by 25 basis points to 3.25%.The NZ central bank’s decision came in as a surprise as the governor Graeme Wheeler was expected to hold the OCR at this quarterly meeting but to signal rate cuts late in the year.Market was pricing around 60% chances of a 25 basis points cut.FX Option Strategies: (AUD/NZD)Expect “Tug of war between bulls & bears” on AUD/NZDWe don’t think any bullish nuisance on this pair anymore as the prevailing bull rallies set a clear implicit backdrop because upswings are not fortified by substantial volumes.We may longs on binary options that will have daily expiry but definitely not on hedging grounds.In order to remain in safe zones we recommend straddles as short term bull run is likely to exhaust.So, for current trend in this pair which we would think it as overreacted pricing, hedge through buying a ATM straddles is the most suitable even though you are neutral on this pair but increased volatility.To construct this strategy, buy ATM Puts and ATM calls with positive delta value.Use near month contracts to take advantage of theta benefits.
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