Euro Hedges Are Most Overpriced Since 2017 Ahead of US Election
- Relative premium is increasing with presidential contest tight
- US race seen as most significant risk since 2017 French vote
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The relative cost of hedging the euro in the run-up to the US presidential elections is the most elevated in seven years as polls suggest voting will go down to the wire.
A key options-market measure — based on how much wider currency swings are expected to be in the future compared with now — hasn’t been this high since the turbulent 2017 French elections, which some feared would scupper the common currency. A positive number for the so-called relative premium indicates hedging costs are overpriced.