Hedge funds that bet the yen would materially weaken following last weekend’s Japanese election were left disappointed after prime minister Shigeru Ishiba announced he would stay on, despite his ruling coalition party losing control of the country’s upper house. Going into the election, investors had turned bearish on the yen, holding roughly $1.1 billion in […]
Amid the ongoing US-China trade war this year, Chinese exporters chose to hold steady on their hedge ratios, according to dealers, owing to high hedging costs and expectations of a stable spot rate. Exporters accumulate US dollars from foreign sales, and many have held on to those dollars in anticipation of continued strengthening against the
Macro investors are struggling to find good trades ahead of the July 9 deadline for the Trump administration’s 90-day tariff pause, choosing instead to focus on the ‘day-to-day’. Traders are having to navigate multiple discrete risk events, such as central bank, G7 and Nato meetings, before the tariff pause ends, and are unsure whether the
Having a stable of high-end trading platforms can be a blessing – and a curse. And while experience and familiarity are valuable, legacy systems eventually start to creak and crawl. Around 2019, State Street realised it had a problem as it looked to build upon and expand its suite of foreign exchange and cash solutions.
When the New Taiwan dollar (TWD) surged unexpectedly on May 2 and 5, the country’s giant life insurers were immediately blamed for the move, given their huge size relative to the Taiwanese domestic market. Market participants, however, have mixed views on how active the insurers really were – but they agree the moves were exacerbated
European asset managers and pension funds are adding more currency hedges to their US equity portfolios following a breakdown of the so-called ‘dollar smile’. The greenback typically appreciates when US stocks are booming or under extreme stress. For foreign investors, the phenomenon – known as the dollar smile – offers a natural hedge against sharp
Goldman Sachs was the top US dealer for foreign exchange trading revenues in 2024, which more than doubled at the firm thanks to increased trading activity at the end of the year, according to regulatory filings. The investment bank generated revenues of $6.3 billion for the year, up 125% from $2.8 billion in 2023, thanks
FX options venue SpectrAxe has hired Robert Schultz as chief operating officer for the Americas, effective April 21. Schultz joins from Deutsche Bank where he worked for more than 12 years, most recently serving as a product manager and vice president in FX prime brokerage and algo trading. In his new role, Schultz is tasked
US president Donald Trump’s whipsawing tariff policies created a perfect storm for foreign exchange options dealers, as hedge funds rushed to short US dollar positions while systematic volatility sellers and large macro funds sat on the sidelines. The ensuing volatility left traders wondering if they had slipped into the wrong desks, or even another dimension.
The sharp fall in the US dollar following President Donald Trump’s “liberation day” tariffs announcement saw intense activity on foreign exchange options desks, leaving dealers rushing to buy volatility to re-hedge EUR/USD books as spot surged. “It was manic… it almost made the Turkish lira [moves] irrelevant,” says one head of FX derivatives at a
Hedge funds are turning once again to hybrid options – a standout feature of 2024’s wave of ‘Trump trades’. This time, though, firms are using the structure to express views on tariffs and the threat of recession. Investors placed high numbers of hybrid option bets on US exceptionalism in 2024, as they correctly predicted that
In the US, March Madness is synonymous with the annual knockout college basketball tournament, known for its unpredictable results and stunning turnarounds. But the country has seemingly exported this concept to its foreign policy in the past month, with shifting tariff threats, territorial disputes and abortive peace talks with Russia putting foreign exchange on the
Since the start of Donald Trump’s second US presidency, many of his tariff-related social media posts have tended to appear late New York time. This piles extra pressure on the Asia trading session when G10 currencies are less liquid and creates risk management challenges for foreign exchange options market-makers. Barry McCarthy, head of FX derivatives
The so-called Trump trade of going long the US dollar via foreign exchange options has seemingly come to a sudden stop following the euro’s massive rally last week, forcing traders to U-turn on their bets. “I think the Trump trade is now dead and all the USD calls that were bought in various forms are
Citi is deploying its new-look single-dealer platform (SDP) to emerging markets in a bid to offer better and faster electronic onshore pricing to users through a single gateway. Following the relaunch of Velocity 3.0 in 2023, the US bank has focused on consolidating its various electronic foreign exchange pricing platforms – including CitiFX Pulse, its
Corporates turn to structured notes to juice cash returns – FX Markets End of drawer navigation content Skip to main content Dual currency notes find favour with treasurers under pressure to boost yields amid higher rates Some corporate treasurers are taking advantage of more volatile foreign exchange and interest rate markets to invest their foreign
Funds tap options on FX vol amid tariff disruptions – FX Markets End of drawer navigation content Skip to main content Dealers say vanillas, digitals and knockouts on realised vol increasingly used to navigate Trump news flow Hedge funds are increasingly taking out complex options structures that speculate on pricing of foreign exchange volatility levels
