Has US dollar hedging hype faded?
While the initial wave of real money USD hedging flows disappointed some dealers, many believe there is more to come
When concerns about incoming tariffs earlier this year led to the US dollar shedding its traditional role as a risk-off safe haven that had cushioned non-US investor returns for years, market participants expected a rush of dollar hedging.
But as they returned to their desks this month after northern hemisphere summer holidays, the key question that the sell side had been asking was whether this dynamic had run out of steam.
“This is the big question all year. And honestly, if I had a pound every
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