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Trump Era, Brexit May Spur Year of Greater Currency Volatility

  • Investors could end up paying higher premiums for hedging
  • Brexit negotiations, euro area elections among risk events
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Is Trump Torn Between a Strong and Weak U.S. Dollar?

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Donald Trump is making volatility great again. If the reaction to the U.S. President-elect’s first press conference is anything to go by, we are in for big swings in currency markets this year.

One-week implied volatility on the euro-dollar, a measure of the cost of options to protect against swings in the currency, surged the most in a month after Trump’s press conference last week. And that came on the back of no real policy news. A dollar index dropped as much as 2 percent in two days.