Tag: North America

  • Limited-loss hedges help US firms dodge costly FX moves

    Limited-loss hedges help US firms dodge costly FX moves


    Foreign exchange structurers are seeing increased demand from US corporates for options-based hedges that can limit losses on their net investment hedges caused by the US dollar’s selloff.

    While the economic value of derivatives hedges offsets changes in foreign assets, when those positions hit maturity companies can face hefty mark-to-market payments.

    Bank structurers, though, say companies with foreign assets and subsidiaries in places like Europe, where the euro has strengthened significantly

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  • ‘This is not a wobble’: Brunello Rosa on the path to de-dollarisation

    ‘This is not a wobble’: Brunello Rosa on the path to de-dollarisation


    When the economist and geopolitical strategist Brunello Rosa was finalising drafts of his book Smart Money last year, he noted presciently that critical events might unfold before its publication in paperback.

    The book, written with co-author Casey Larsen, envisages a new cold war unfolding between the US and China in which “digital de-dollarisation” plays a central role.

    The paperback is due out in June. In the meantime, the fallout from the Trump administration’s tariff announcements in early

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  • Goldman Sachs doubled FX trading revenues in 2024

    Goldman Sachs doubled FX trading revenues in 2024


    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 to just over $4 billion in the final quarter of the year alone. This growth propelled the bank to overtake JP Morgan’s 2023 top spot.

    JP Morgan suffered the greatest dip among

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  • EU firms fear dollar liquidity becoming tariff bargaining chip

    EU firms fear dollar liquidity becoming tariff bargaining chip


    European financial institutions are concerned that any renewed escalation of trade tensions with the US could spill over into actions that would limit their ability to source dollar funding.

    A chief risk officer (CRO) at a European wealth manager says this scenario remains “extreme”, but not impossible.

    “One of the scenarios I have been starting to play with is if all US dollars have to be held in US banks,” says the CRO. “You have to understand your third-party risk dependencies on large banks.”

    U

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  • Tariffs volatility prompts rush to re-hedge EUR/USD options books

    Tariffs volatility prompts rush to re-hedge EUR/USD options books


    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 large European bank.

    The US Dollar Index fell 3.2% overnight after the announcement on April 2, one of its worst days since 2022, as investors fretted

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  • Corporates hamstrung in response to FX volatility

    Corporates hamstrung in response to FX volatility


    US corporates are having a hard time responding to increased currency volatility as internal restrictions around hedging programmes make it difficult for them to react quickly to the shifting strength of the dollar.

    Heightened foreign exchange volatility, driven in particular by President Donald Trump’s chaotic tariff announcements, has seen the dollar weaken and made it difficult for corporates to forecast future cashflows from foreign earnings or imports. Treasurers, however, lack the

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  • Short-term Trump FX trades ‘dead’ as euro rallies

    Short-term Trump FX trades ‘dead’ as euro rallies


    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 either worthless or unwound,” says an FX options trader at one UK hedge fund.

    The move also created hedging headaches for market-makers trying to manage their options exposures as euro/US dollar

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  • Trump’s tariff threats stress London gold market

    Trump’s tariff threats stress London gold market


    The London gold market is facing a mounting structural crisis.  

    Bullion banks that lend precious metals to producers and each other moved over 200 tonnes of gold to New York in January in response to US President Donald Trump’s tariff threats, leaving the London market desperately short of physical supplies.

    Dealers in London routinely borrow gold to fund customer positions. The cost of doing so, which has historically ranged from -20 basis points to +10bp, shot up to between 300bp for short

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  • Corporates pressed on FX hedges as dollar surge bites

    Corporates pressed on FX hedges as dollar surge bites


    Foreign exchange losses have begun to mount for some of the largest global corporates, with the likes of Amazon, Apple and Nike reporting revenues negatively affected by continued US dollar strength in the fourth quarter.

    Since September, the dollar has risen by as much as 7% against many G10 and emerging market currencies, reducing the demand for exports and the value of foreign returns.

    In the past, it was common for analysts and investors simply not to ask about or even consider the FX hedging

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  • Corporates eye complex FX hedges as carry costs mount

    Corporates eye complex FX hedges as carry costs mount


















































    Corporates eye complex FX hedges as carry costs mount – FX Markets



    Leveraged forwards and options-based structures entice treasurers facing rates uncertainty and FX volatility


    The shake-em-up economic policies trailed by new US president and so-called “disruptor-in-chief” Donald Trump have left corporate treasurers on both sides of the Atlantic nervously eyeing their cost of foreign exchange hedging.

    FX volatility has spiked amid continued threats by Trump of tough tariffs on Canada, Mexico, China and the European Union. Meanwhile, interest rate differentials between the US and Europe are expected to widen as analysts forecast higher-for-longer rates from the Federal

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  • Does no-hedge strategy stack up for mag seven mavericks?

    Does no-hedge strategy stack up for mag seven mavericks?

















































    Does no-hedge strategy stack up for mag seven mavericks? – FX Markets



    At Amazon, Meta and Tesla, the lack of FX hedging might raise eyebrows, but isn’t necessarily a losing technique


    The so-called magnificent seven – the seven largest US tech companies that famously make up more than a third of the S&P 500 by market cap – are among the world’s largest firms. They also have some of the greatest geographical distributions – in some cases operating in over 100 countries.

    Yet filings for these tech giants show that three of them – Amazon, Meta and Tesla – choose not to hedge their day-to-day foreign exchange exposures. They reveal no holdings of offsetting FX derivatives

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  • Amazon, Meta and Tesla reject FX hedging

    Amazon, Meta and Tesla reject FX hedging

















































    Amazon, Meta and Tesla reject FX hedging – FX Markets






    FX Markets study shows tech giants don’t hedge day-to-day exposures


    Tech-titans-shun-FX-hedging

    Amazon, Meta and Tesla – three of the so-called magnificent seven tech firms that drive US stock market performance – decline to hedge their day-to-day foreign exchange exposures. So concludes a study by FX Markets of the firms’ quarterly filings over the past five years.

    Corporates operating in dozens of countries typically hedge the FX risk from their foreign revenues and expenses with derivatives. But a study of the three companies’ filings shows no evidence of any FX hedging activity. What’s

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  • Franklin Templeton dethrones MSIM as top FX options user

    Franklin Templeton dethrones MSIM as top FX options user


    Franklin Templeton has become the largest user of foreign exchange options among US mutual funds, taking the top spot from Morgan Stanley Investment Management for the first time since the end of 2020.

    The California-based fund manager increased notional volumes by around $340 million during the third quarter of 2024, taking the total size of its FX options book to nearly $5.9 billion.

    Meanwhile, MSIM continued to cut the size of its renminbi-denominated positions, this time by just over $700

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