FX option selling and weak demand behind vol slide, say traders
EUR/USD vol inches towards pre-Covid lows, but some believe inflation could upset trend
The return of volatility sellers and a lack of directional interest from fast money have combined to grind foreign exchange vol down towards pre-Covid levels, say options traders. Even though inflation could revive this corner of the market, it’s not clear whether FX will see the full benefit.
“I don’t expect there’s going to be much meaningful demand for vol, at least in the very near future,”
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