Hedge funds are significantly increasing bearish bets against currencies like the yuan, euro, and Mexican peso, speculating that Donald Trump will win the upcoming US presidential election, according to a report by Bloomberg.
In the $300bn-plus currency options market, traders have seen a surge in demand for dollar call options — bets that rise in value if the US dollar strengthens against currencies facing potential tariffs. The report cites data from the Depository Trust & Clearing Corporation as showing that contract volumes for the yuan and peso reached their highest levels this month on Tuesday, even surpassing volumes seen after the US jobs report on 4 October.
“The spike began when Trump’s election odds improved last week,” said Saurabh Tandon, global head of FX options at Standard Chartered Bank in Singapore. “The most popular trades involve topside dollar-offshore yuan, followed by downside euro-dollar and topside dollar-Mexican peso bets.”
The uptick in currency options trading mirrors moves by global corporations to hedge against currency risks ahead of the 5 November election. Former President Trump is gaining ground against Democratic nominee Kamala Harris in betting markets, prompting investors to prepare for how a second Trump term could impact global markets.
Just a week ago, hedge funds showed little clear positioning on the election. However, in a recent interview with Bloomberg News, Trump said tariffs would help prevent the US from being flooded with foreign goods, reiterating threats of across-the-board tariffs, including a 60% levy on Chinese imports and at least a 10% duty on products from other countries.
