Dollar Slide Extends After Biggest One-Day Plunge Since 2022
The dollar plunged the most in three years, with the cost of hedging against further slides climbing to the highest since the Covid pandemic shuttered cities in early 2020.
Broad weakness in the US currency extended into Asia trading Friday, after the Bloomberg Dollar Spot Index closed down 1.5% at the end of trading in New York Thursday, the biggest daily tumble since 2022. Investors moved out of Latin American currencies and into havens like the Swiss franc and the Japanese yen, with the euro and pound also benefiting.
“It certainly does seem like US assets are broadly under performing amid the tariff uncertainty and growing concerns over the US economic outlook,” said Felix Ryan, an analyst at ANZ Banking Group in Sydney. “So far this has been benefiting European currencies (especially the euro) and the safe havens the most.”
The options premium paid to hedge against a decline in the US currency against a basket of peers over the next week reached the highest since March of 2020, relative to positioning for gains. As economic worries intensified, traders boosted bets on deeper interest-rate cuts by the Federal Reserve by year-end. Stocks tumbled anew as the White House said US tariffs on China rose to 145%.
Source: Bloomberg
