USD/CAD risk reversal snaps two-day downtrend, focus on Canada elections

One-month risk reversal on USD/CAD, a measure of the spread between call and put prices, rises for the first time in three days, not to forget mentioning about portraying the strongest bullish bias in a week, according to data source Reuters. 

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. That said, the daily difference between them jumps to the +0.054 level heading into Monday’s European session, per Reuters.

The options market scenario backs the USD/CAD bulls ahead of today’s Canada Federal Elections. The Loonie pair prints a three-day uptrend, also poking the monthly peak, despite recently easing from the multi-day top of 1.2801 to 1.2790.

Read: Canadian Federal Elections: A not very crucial vote

While the Canadian elections are less likely to offer any meaningful directions to the USD/CAD prices, the US dollar’s safe-haven demand ahead of Wednesday’s Federal Open Market Committee (FOMC) may keep the buyers hopeful.

Read: Fed Preview: Three ways in which Powell could down the dollar, and none is the dot-plot