BNY: Fed-Driven Hedge Rebuilding Revives Dollar Selling Pressure
BNY strategist Geoff Yu says cross-border investors are rebuilding USD hedges after the July Fed meeting, reviving dollar selling pressure even as underlying demand for U.S. assets remains solid.
According to BNY’s Geoff Yu, the July Federal Reserve meeting represents a peak in dollar de-hedging rather than the end of U.S. exceptionalism. That shift matters because cross-border investors are now rebuilding USD hedges.
By increasing hedge ratios, investors reduce their effective unhedged exposure to U.S. assets. This hedging flow is reviving selling pressure on the dollar, even though underlying demand for U.S. assets is described as broadly solid.
BNY’s view suggests the dollar may face renewed headwinds from portfolio hedging rather than from a collapse in foreign demand for U.S. markets.
Source: FXStreet Forex News