This week, the U.S. dollar enjoyed its largest single-day gain ever in the foreign exchange market. It reached a six-day high against the loonie and was mostly higher against major peers. Traders were looking forward to big options expirations. In turn, changes in currency pairs were characterized by both steadiness and suddenness.
On Tuesday, the greenback reached about CAD1.3845 against the loonie. And the market blasted higher as it anticipated a net buying of more than $1 billion in stock via the options. These puts are due to expire between CAD1.3850 and CAD1.3860. The sentiment and trader reaction caused by these expirations may have an impact on trading strategy and volatility over the next few trade days.
In the Asian markets, the dollar first fell to JPY147.80 compared with the Japanese yen. It caught its second wind and eventually rose back up, hitting session highs around JPY148.80 during the first half of North American trading hours. This short dollar movement is an early sign of a dollar recovery, as traders adjust their positions after months of dollar-induced volatility.
On the downside, the Mexican peso had a mixed bag. The greenback remained inside Tuesday’s range, bouncing between about MXN18.6225 and MXN18.8635. The dollar’s stability in this range suggests that traders remain cautious, weighing economic data and geopolitical factors that could impact the peso’s valuation.
Last week, the dollar fell to its weakest level of the year against the offshore yuan. At issue, studies done before and after the fact heavily loaded trucks fell at CNH7.1160. Yet it was able to bounce back on Tuesday, finding a floor in the CNH7.15 area to consolidate there. This recovery is indicative of continued re-positioning by speculators as they try to make sense of the entire commodities spectrum and signals from the macroeconomic backdrop.
Continentally, the European currency landscape witnessed some major shifts as well. Today, options covering about 2.1 billion euros are about to expire at a strike price of $1.16. This development has the potential to introduce heightened volatility in USD/EUR markets as the contract’s expiration date approaches. Yesterday in North America, the euro touched a session low of $0.9474. This decline happened despite ADP’s estimate of a slowdown in private sector job creation coming in below economists’ expectations.
Sterling was having its own difficulties, trading near a four-week low on Wednesday, just under the $1.3335 level. The recent mistake in the retail sales data has been revealed. This marked sales increase turned out to be just 1.1% for the first six months of 2025 instead of the reported 1.7%, making it a GBP 2 billion hole. This fresh surprise probably helped trigger the resulting further 5% fall of the sterling.
The British pound surged today, climbing back above $1.3480, defending the currency’s capacity to recover even after suffering unexpected losses. Traders are probably watching every development to carefully re-calculate their bets as economic data shifts.
The Australian dollar stayed over $0.6500 yesterday, where options of almost A$1.1 billion are due to expire today. This level still is very important to options expiring today, as likely future directions can be determined largely by how these expirations shake out.
The U.S. dollar index hasn’t poked above the range established on August 22. This can be seen as a positive sign of stability, even as other economic signals remain mixed. This week’s adjustments, including today’s value of CNY7.1064, continued to be higher than last Friday’s value of CNY7.1030. This trend has created a hopeful picture for continued dollar strength against the yuan.