This portrays market pricing (expectations) for the next central bank meeting – the step (in basis points) from the next meeting to the second, and number of hikes priced for the full-year.
(Source: Pepperstone - Past performance is not indicative of future performance.)
Given the data flow above and the moves in price we've seen of late, we can use the options market to understand the expected movement priced into the volatility markets. Using the weekly ‘straddle’ price we can project the implied/breakeven move onto spot and see the expected range on the week with a 68.2% and 95% level of confidence. If we look at markets as a series of probabilities or distribution of outcomes, these can offer guidance in that assessment. This can help with mean reversion and our risk process.
(Source: Pepperstone - Past performance is not indicative of future performance.)
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