USD/CNH risk reversals flip bullish as Sino-US tensions escalate

Investors have turned bullish on USD/CNH (Yuan's offshore exchange rate), options markets showed on Thursday. 

One-month risk reversals (CNH1MRR) showed the implied volatility premium for USD/CNH calls over puts rising to 0.262 on Thursday, having traded at -0.05 in favor of puts on Wednesday. A call option gives the purchaser the right to buy the underlying asset, while a put option represents the right to sell. 

The data indicates the investors are anticipating losses in yuan, possibly due to the ongoing SIno-US tussle. The USD/CNH pair jumped 0.70% on Wednesday after the United States ordered the closure of the Chinese consulate in the Texas city of Houston on Wednesday, marking an unprecedented escalation of tensions with Beijing. 

CNH1MRR