FX options see record volumes as yen goes off-script

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Trading in US dollar/Japanese yen foreign exchange options hit record levels last week as coronavirus fears and weak economic data sparked a wave of speculation and hedging activity, with $40 billion notional being traded in a single day.

Last week’s surprise 2% upward move in USD/JPY spot triggered a rush for upside call options from hedge funds, which dealers hedged by buying spot and calls. Residual exposure to exotic one-touch and knockout options, which must be re-hedged as spot moves, may

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