Currency Traders Bet on Trump Stirring Up Market Volatility
- Hedge funds buy up options that pay out if FX swings increase
- Traders expect policy divergence between US and Europe
This article is for subscribers only.
Currency traders are betting that Donald Trump’s policy agenda is about to jumpstart volatility in the $7.5 trillion-a-day foreign exchange market.
After years of benign moves, a gauge of one-year volatility on the euro-dollar exchange rate surged after the election. Hedge funds are scooping up options contracts that pay out if currency swings increase and strategists have dramatically revised their currency forecasts.