Hedge funds are ramping up bearish positions against currencies from the yuan to the Mexican peso to speculate that Donald Trump will win the US presidential election next month.
Randall Bartlett, senior director of Canadian Economics at Desjardins, joins BNN Bloomberg and talks about what a Trump Presidency could mean for Canada's econ
“It started when odds started shifting in Trump’s favor last week,” said Saurabh Tandon, Singapore-based global head of FX options at Standard Chartered Bank. “The most popular expressions have been topside dollar-offshore yuan followed by downside euro-dollar and topside dollar-Mexican peso.” Those views jolted markets into mapping out what that could mean for currencies from the yuan to the peso and euro.
Most of the option positions were in forms of outright vanillas and digitals out to year-end, said Standard Chartered’s Tandon. Vanilla refers to a simple call option that has no special features or observation dates, while digital options offer the opportunity of a fixed payout if the underlying market price exceeds the strike price, a pre-determined limit.
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