Protection Against a Dollar Plunge Is the Costliest Since 2009
- Options market reflects bearish sentiment on the greenback
- Investors buy $6 billion EUR/USD options, $3 billion USD/JPY
Redeker Says U.S. Needs Growth to Relieve Dollar Pressure
This article is for subscribers only.
Nervous currency traders are paying the most in eight years for insurance against a plunge in the dollar.
With the Federal Reserve expected to hold interest rates steady Wednesday, traders in the $5.1-trillion-a-day currency market are paying an added premium for the first time since October 2009 on options to protect against an extreme decline in the dollar against the euro over a six-month tenor. One measure, known as a 10-delta risk reversal, is an indication of trader bias in the options market, which currently reflects expectations that any move in the euro would be dramatic.