FX options awaken amid volatility uptick

Spikes of volatility have appeared in FX markets in recent weeks, prompting speculation that a long period of dormancy in currency options might be coming to an end. However, reports of a forthcoming bonanza could be exaggerated, some analysts say.

The dollar last week took a breather from a 12-week rally, its longest positive move since at least 1971, and the US dollar index, which tracks the greenback against the currencies of six trade partners, fell slightly to 85.91, after reaching 86.75 the previous week, its highest level since June 2010.

The impact of the resurging dollar has caused waves of volatility, with emerging markets currencies, the euro and Antipodean dollars moving out of their ranges.

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