Currencies
Dollar Hedging Costs Highest Since 2022 on Election Risk
- One-week measure of implied volatility near a two-year high
- As dollar rallies, traders eye fallout from presidential vote
The dollar index has risen more than 3% so far in October, putting it on pace for its best month since September 2022.
Photographer: Samsul Said/BloombergThe price to hedge against swings in the US dollar surged to the highest in nearly two years as traders prepare for the risk of big market moves after next week’s presidential election.
A measure of one-week implied volatility on the Bloomberg Dollar Spot Index rose on Wednesday to the highest since December 2022, when recession fears briefly raced through financial markets. That indicates traders are preparing for large swings in the currency against major peers like the euro, yen, Chinese yuan and Mexican peso, pushing up the cost of options that protect against such moves.