Currencies
Currency Volatility Is Back as Geopolitics Add to Dollar Bets
- Hedging costs in major currencies rally to three-month high
- Bearish bets on the euro and the pound dominate on Fed outlook
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Volatility in the currency market is surging as traders bet renewed concerns over geopolitical tensions in the Middle East and faster-than-expected inflation in the US will propel the dollar higher.
A gauge for hedging swings in major currencies over the next month has jumped to the highest since January. The latest leg of the move was sparked by Iran’s attack on Israel, and comes after strong US inflation data last week fueled speculation the Federal Reserve will have to hold monetary policy tight for longer.