The cost of hedging the U.S. dollar reached its highest level since 2022 due to election risks; ① The price of hedging U.S. dollar fluctuations surged to the highest level in nearly two years as traders prepared for the risk of sharp market swings after next week’s presidential election. One-week implied volatility in the Bloomberg Dollar Spot Index rose on Wednesday to its highest level since December 2022, when recession fears briefly gripped financial markets. This shows that traders are preparing for sharp fluctuations in the yuan against major currencies such as the euro, Japanese yen, yuan and Mexican peso, pushing up the cost of options to protect against such fluctuations; ② Skylar, currency strategist at Barclays in New York “The election is a binary event for FX markets, so there is an increased need for election FX hedging,” said Montgomery Cornyn. Emerging market currencies including the peso, yuan and South Korean won “are seen as having a negative impact on the U.S. election.” “The most sensitive currency”; ③ As the economy continues to show surprising strength, bond yields have risen sharply, and the U.S. dollar index has risen more than 3% so far in October, on track for its best month since September 2022. On Wednesday, the Bloomberg Dollar Index fell for the first time in four sessions in month-end trading, but remained close to its highest level since July. Derivatives traders are now bullish on the currency and are pledging to keep U.S. yields higher than elsewhere as expectations of a sharp rate cut from the Federal Reserve have eased. The election may also contribute if doubts about the election results drive investors into safe havens, or if a Trump victory could exacerbate inflationary pressures through tax cuts and high tariffs on major trading partners; ④ Tax cuts will The economy generates more stimulus and worsens the deficit, making the bet on higher yields the so-called Trump trade. At the same time, tariffs could restrict imports and thus reduce U.S. demand for overseas currencies, further supporting the dollar. ⑤ Steve Englander, head of global G10 foreign exchange research and North American macro strategy at Standard Chartered Bank, wrote: “We see some risk that the market is not only pricing in a Trump victory prematurely; Implied volatility on the U.S. dollar index among its major peers surged on Wednesday. Volatility in the euro and pound is expected to reach levels not seen since the banking crisis in March 2023 over the next seven days. Such volatility in developed markets is expected to subside in the weeks following the vote, while in contrast, market volatility in the peso and yuan is expected to continue into next month. Marc Chandler, chief market strategist at Bannockburn Global Forex LLC, said that for the U.S. dollar, market movements “point to the uncertainty surrounding the U.S. election.” “The U.S. dollar has reached levels not seen in months, which may help support broader foreign exchange fluctuations” _Foreign Exchange Dynamic Report_Huitong Finance www.fx678.com

Huitong Finance APP News——Due to electoral risks,DollarHedging costs hit highest since 2022;
① Prices for hedging dollar swings surged to their highest levels in nearly two years as traders braced for the risk of sharp market volatility following next week’s presidential election. One-week implied volatility in the Bloomberg Dollar Spot Index rose on Wednesday to its highest level since December 2022, when recession fears briefly gripped financial markets. This indicates that traders are preparing forRMBredeemEUR、Japanese yuanPrepare for sharp swings in major currencies such as the Chinese yuan, the Chinese yuan and the Mexican peso, driving up the cost of options to protect against such swings;
② Skylar Montgomery Cornyn, a currency strategist at Barclays in New York, said: “The election is important forForexIt is a binary event for the market and hence the demand for election FX hedging has increased. “Emerging market currencies including the peso, yuan and South Korean won “are seen as the most sensitive to the U.S. election”;
③ As the economy continues to show surprising strength, bond yields have risen sharply, rising more than 3% so far in October and on track to be the best month since September 2022. On Wednesday, Bloomberg fell for the first time in four sessions in month-end trading, but remained close to its highest level since July. Derivatives traders are now bullish on the currency and are pledging to keep U.S. yields higher than elsewhere as expectations of a sharp rate cut from the Federal Reserve have eased. The election could also contribute if doubts about the outcome push investors into safe havens, or if a Trump victory could fuel inflationary pressures through tax cuts and steep tariffs on major trading partners;
④ Tax cuts will create more stimulus for the economy and worsen the deficit, making bets on higher yields the so-called Trump trade. At the same time, tariffs could restrict imports and thus reduce U.S. demand for overseas currencies, further supporting the dollar.
⑤ Steve Englander, head of global G10 foreign exchange research and North American macro strategy at Standard Chartered Bank, wrote: “We see some risk that the market is not only pricing in a Trump victory prematurely; Implied volatility among major peers surged on Wednesday. EUR andGBPVolatility is set to reach levels not seen since the banking crisis in March 2023. Such volatility in developed markets is expected to subside in the weeks following the vote, while in contrast, market volatility in the peso and yuan is expected to continue into next month. For the U.S. dollar, market moves “point to the uncertainty surrounding the U.S. election,” said Marc Chandler, chief market strategist at Bannockburn Global Forex LLC. “The dollar has reached levels not seen in months, which could help support broader FX moves”

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