Currency market traders are increasing their hedging in anticipation of further strengthening of the dollar ahead of a key speech by Federal Reserve Chairman Kevin Warsh at the Jackson Hole symposium. This is reported by Bloomberg.
According to the agency, the American currency has already regained half of its previous losses following an unexpected move by U.S. Treasury Secretary Scott Bensent last week, when he took a position supporting the bond market. The article notes that this has worsened investor sentiment towards the dollar.
Bloomberg's data indicate that the dynamics of options flows and the positions of market participants show that traders are hedging against the possibility of further dollar recovery. They are hedging risks in case Warsh adopts a tough stance or reiterates that the Fed should focus on monetary policy and not interfere in budgetary and tax policy issues.
