The lack of data about the new Omicron COVID-19 variant will maintain an air of caution going into this week"s policy announcements from the Fed, ECB and Bank of England, with that uncertainty and its risk of related FX volatility evidenced by inflated shorter dated expiry FX option implied volatility. One-week option implied volatility was marked significantly higher when expiry captured the central bank announcements from last Thursday, and 1-month expiry implied volatility is underpinned, despite most FX markets holding familiar ranges. However, there will be downside potential for implied volatility at the end of the week, as dealers reprice risks to cater for the traditional Christmas lull. USD/JPY option price action is consistent with near term range trading, but while risk reversals premiums for JPY call/USD put strikes might be easing, they retain enough premium to warn USD/JPY traders to be mindful of USD/JPY downside risks. Slow EUR/USD implied volatility setbacks highlight the perceived risk of more actual volatility, but the recent erasure of downside strike risk reversal premiums suggest that directional risks appear more balanced. GBP/USD protection costs remain heavily skewed to downside