AUD/USD risk reversals hit 5-month high

• Risk reversals indicate falling demand for AUD bearish bets.

The one-month 25 delta risk reversals rose to -0.425 today; the highest level since July 27.  The steady rise from the November low of -0.80 indicates falling demand for the AUD put options (bearish bets).

It adds credence to the recovery in the 10Y AU-US yield spread from the Nov. 30 low of 10 basis points to 20 basis points. However, the AUD/USD still trades below the 200-day MA of 0.7692.