One-month risk reversal (RR) on USD/CAD, a measure of the spread between call and put prices, drops for the seventh consecutive week per the data source Reuters. 

A call option gives the holder the right but not obligation to buy the underlying asset at a predetermined price on or before a specific date. A put option represents a right to sell. That said, the weekly RR drops to -0.012 by the press time of early Wednesday.

The options market signal contrast the latest USD/CAD price performance as the Loonie pair pokes weekly high while keeping the last week’s rebound from a four-month low, grinding higher around 1.2390 by the press time.

Given the likelihood of the Bank of Canada’s (BOC) tapering announcements, USD/CAD prices may witness further downside. However, any surprise may follow the firmer US dollar moves to favor the pair buyers.

Read: USD/CAD Price Analysis: Grinds higher around 1.2400, BOC Interest Rate Decision eyed