Currencies
US Election Risks Are Starting to Show Up in Foreign Exchange Markets
- Yuan’s 6-to-3-month volatility spread surges to record high
- JPMorgan to maintain long dollar exposure through options
Voters cast their ballots in Charleston, South Carolina.
Photographer: Allison Joyce/BloombergThis article is for subscribers only.
Currency markets have started pricing in elevated foreign exchange volatility around the US vote on Nov. 5, even with election day almost six months away.
That concern is particularly pronounced in options betting on the Chinese offshore yuan, with the spread between six- and three-month implied volatility for the currency soaring for a second day. The spread rose to 1.20 percentage point on Tuesday, up from 0.73 percentage point on Friday, the biggest increase since 2011 when that information first became available, according to data compiled by Bloomberg.