Traders Bet Dovish Bank of Japan to Capitulate After Swiss Shock
- Relentless rally in the options space unfolds for yen exposure
- Overnight volatility rises above 30% as traders rush for cover
The Bank of Japan (BOJ) headquarters in Tokyo.
Photographer: Toru Hanai/BloombergThis article is for subscribers only.
Currency options traders are betting the Bank of Japan will join global peers like the Swiss National Bank in roiling markets with a monetary-policy surprise this week.
Demand to hedge one-day price swings in the yen ahead of the BOJ’s meeting Friday is the highest since March 2020 and traders are also betting that the yen -- which has gained over 1% so far this week -- could extend the rally. An unexpected move by the SNB to raise interest rates for the first time in 15 years on Thursday put the franc on track for its biggest rally since January 2015, when a cap on the currency was removed.