USD/CAD tracks risk reversal to one-week high

One-month risk reversal on USD/CAD, a measure of the spread between call and put prices, extends call (bullish) bias with a jump to +0.050 from +0.025 seen on May 27, according to data source Reuters. The figures also rise to the one-week high.

A call option gives the holder the right but not obligation to buy the underlying asset at a predetermined price on or before a specific date. A put option represents a right to sell. 

The recent run-up in the risk reversal goes hand-in-hand with the USD/CAD price recovery during the last one week, near the previous week’s high of 1.2144 by the press time.

That said, an upside clearance of a two-week-old falling trend line, marked the previous day, adds strength to the USD/CAD bullish signals.