AUD/JPY overnight put demand weakens as risk appetite recovers

• Demand for AUD/JPY puts weakens. 
• Still too early to call a bottom in AUD/JPY cross. 

AUD/JPY overnight 25 delta risk reversals rose to -5.2 today vs. -6.1 on Friday, indicating the demand for put options (bearish bets) or premium claimed by puts over calls has dropped somewhat, possibly due to Friday's positive price action in the S&P 500 index. 

About ten days ago, the overnight risk reversals were being paid at AUD 2.4 puts. The decline from -2.4 to -6.1 indicates the investors are hedging against the rising-yield-led risk aversion in the stocks and the resulting demand for the Japanese Yen. 

Also, it is too early to call a bottom in the AUD/JPY cross as the risk reversals gauge is still well below -2.4 (Feb. 2 high). The cross hit a low of 84.01 on Friday and was last seen chipping away at the 1h 50-MA level of 85.00. 

Overnight risk reversals (AUDJPONRR)