Latest news with #DepositoryTrust&ClearingCorp
Mint
6 days ago
- Business
- Mint
Traders Look Beyond Euro for Next Round of Short Dollar Bets
(Bloomberg) -- Traders are seeking alternatives to the euro when shorting the dollar as they look to capitalize on expectations for further weakness in the US currency. Long euro positions against the greenback remain in favor due to optimism over increased defense spending in the single-currency region. Traders though are looking to bet currencies such as the Chinese yuan, Australian dollar and South Korean won will strengthen versus their US peer on expectations the Federal Reserve will resume interest-rate cuts and as American exceptionalism fades. Dollar-yuan option trading volume on the Depository Trust & Clearing Corp. climbed to a one-month high last week with investors paying a premium to speculate on downside moves in the pair versus upside ones. Volumes in Australian dollar call options, which gain if the currency rises against the greenback, were nine times greater than puts, data from the Chicago Mercantile Exchange Group's central limit order book showed July 1. 'The most recent demand in FX options has been a play in USD/CNH lower via dollar put digitals,' as well as other downside option structures, said Mukund Daga, head of foreign-exchange options for Asia at Barclays Bank in Singapore. 'This has been on the back of the most recent truce pact' that US President Donald Trump has signed with China, he said. A put digital option refers to a strategy that offers a fixed payout if the currency pair falls below a predetermined level when it expires. There's also an increased interest in bullish option structures for the Korean won, Daga said. Hedge funds are betting the won may replicate the Taiwan dollar's surge in early May, when the central bank allowed its currency to appreciate to help reach a trade deal with the US. The removal of political uncertainty in South Korea may also help support the won. What Bloomberg Strategists Said... 'A weaker dollar and a steady, gradually appreciating yuan have underpinned KRW gains in recent weeks despite tariff risks. From a valuations lens, the won remains competitive. Its real effective exchange rate is still cheap relative to historical averages, leaving room for further appreciation without threatening export dynamics.' — Mary Nicola, Macro Strategist, Singapore While long euro trades are still popular, interest in the Australian dollar is growing, according to Troy Fraser, head of foreign-exchange sales for Australia and New Zealand at Citigroup Inc.. 'We have seen interest mainly from hedge fund clients to put on AUD/USD topside in the short tenors over the past few weeks,' he said. One currency that traders appear less enthusiastic about is the yen. Appetite for long positions in the currency cooled after it tumbled versus the dollar in parts of May and June. 'USD/JPY short has certainly been a widow-maker,' said Antony Foster, head of Group-of-10 spot trading at Nomura International Plc in London. 'There are trade talks and politics involved which, once resolved, might help USD/JPY revert lower again, but whilst the risk is there, people are reluctant to really involve themselves.' More stories like this are available on
Yahoo
06-03-2025
- Business
- Yahoo
Euro's Best Rally Since 2015 Fans Bets on Further 10% Surge
(Bloomberg) -- The euro's best three-day rally since 2015 is encouraging traders to bet the currency will rise 10% further in coming months. Republican Mayor Braces for Tariffs: 'We Didn't Budget for This' Trump Administration Plans to Eliminate Dozens of Housing Offices How Upzoning in Cambridge Broke the YIMBY Mold NYC's Finances Are Sinking With Gauge Falling to 11-Year Low Remembering the Landscape Architect Who Embraced the City Hedge funds are buying options betting that the currency could reach as high as $1.20 in six to nine months, according to FX traders familiar with the transactions who asked not to be identified because they aren't authorized to speak publicly. That level was last seen in 2021. Options sentiment, as depicted by so-called risk reversals, turned most bullish on the euro in five years, while data from the Depository Trust & Clearing Corp. show that two out of three options this week targeted a stronger euro. The common currency rose 1.5% to $1.0789 Wednesday, the highest in four months, and had its biggest three-day gain since August 2015 after Germany announced plans to unleash hundreds of billions of euros for defense and infrastructure spending. 'To me the initial move is to $1.12,' said Jack McIntyre, a portfolio manager at Brandywine Global Investment Management. 'But if I'm right, this thing could have more legs, meaning that you start getting up into the $1.20 area.' The anticipated historic increase in German borrowing, along with growing concerns about the negative impact of aggressive tariffs on the US economy, are supporting the euro, prompting a rush by investors for topside exposure. The euro has jumped above the closely watched 200-day moving average. A close above that level would signal further gains to traders who watch technical measures, opening the door for a test of last year's highs around $1.12. That's a sharp contrast to prevailing expectations earlier this year that the euro was headed for parity against the greenback. 'The euro-dollar market dynamics are undergoing significant shifts,' said Julian Weiss, head of global G-10 vanilla FX options trading at Bank of America, noting that demand for euro call options has surged. 'This development may signal the onset of a new trend, potentially reversing the multi-year US dollar rally.' Some analysts, however, are questioning whether the rally is sustainable. 'The dollar depreciation momentum could have further to run and while we abandoned our call for EUR/USD to drop below parity, we maintain our view that renewed US dollar strength is still likely,' said Derek Halpenny, head of FX research at MUFG. --With assistance from Naomi Tajitsu, Alice Atkins and Anya Andrianova. (Updates market prices throughout.) The Mysterious Billionaire Behind the World's Most Popular Vapes Rich People Are Firing a Cash Cannon at the US Economy—But at What Cost? Greenland Voters Weigh Their Election's Most Important Issue: Trump Trump's SALT Tax Promise Hinges on an Obscure Loophole Snack Makers Are Removing Fake Colors From Processed Foods ©2025 Bloomberg L.P.
Bloomberg
06-02-2025
- Business
- Bloomberg
The Yen Is Back in Favor as Currency Traders Shun the Dollar
A wild week in the currency markets has left hedge funds heading for the exits on their dollar trades and turning their attention toward the Japanese yen. Interest in the yen surged Wednesday, making it the most-traded currency versus the dollar, according to data from the Depository Trust & Clearing Corp. Option trading volume on the yen was nearly double that of its previous high this year, as the currency rallied versus all its major peers after better-than-expected Japanese wage data bolstered the case for the Bank of Japan to keep raising interest rates.
