USD/CNH risk reversals turn negative for the first time since April

• USD/CNH risk reversals printed negative value on Friday for the first time since April.
• The negative risk reversals indicate a rising demand for the CNH calls.

The USD/CNH one-month 25 delta risk reversals (CNH1MRR) fell to -0.08 on Friday - the lowest level since April, signaling the implied volatility premium for the CNH call options is more than the implied volatility premium for the CNH put options.

In simple terms, it means the demand for the CNH calls is on the rise, meaning the options market has turned bullish on the offshore yuan exchange rate (bearish on the USD/CNH pair).

The data only adds credence to bearish reversal, as indicated by the head-and-shoulders breakdown on the USD/CNH pair.

At press time, the risk reversals stand at -0.05.

CNH1MRR