USD/JPY: Option-related flows driving bearish party

FXStreet (Bali) – We should remind readers that the acceleration in USD/JPY losses comes after the leveraged money community had been increasing its USD long bets significantly in recent weeks, especially in the Yen market, thus the cascade of stop loss orders seen.

Option-related flows driving the bear show

Sean Lee, Founder at FXWW, notes: “USD losses mainly option related flows in USD/JPY at the moment. Bids expected to be solid near 122.50 but could get nasty below 122.10.” Options market was betting big for a higher USDJPY on Tuesday, judging by the latest CME data available, with 18,531 calls vs 4,093, with open interest 13,160 in calls vs 1,756 puts. After BOJ Kuroda’s headlines, all hell broke loose, thus option-related flows coupled with stop losses fueling the downside.

AUD/USD has gunned through stop loss orders above a big level at 0.7728, printing its highest at 0.7750. The major turnaround in the Yen has led to some major liquidation in USD long positions.

(Market News Provided by FXstreet)