Core Viewpoint - The article discusses the mismatch between short-term foreign exchange hedging and the long-term narrative of de-dollarization, suggesting that while there is a strong belief in a weak dollar, it may overlook potential reversal opportunities [1][3]. Group 1: Foreign Capital and Dollar Hedging - Since the second quarter, there has been a strong consensus that actions like Trump's tariffs and interference with the Federal Reserve's independence have impacted the credibility of the dollar, leading to non-U.S. capital fleeing dollar-denominated assets [3][4]. - A recent BIS report questions whether non-U.S. investors are truly abandoning dollar assets, suggesting they may be more focused on currency hedging rather than divesting from dollar securities [4][6]. - Data from CFTC indicates a significant increase in short positions on the dollar index by asset management companies, reflecting a rising demand for hedging against currency risk [6][8]. Group 2: Market Indicators and Trends - The risk reversal options market shows that investors are increasingly hedging against the risk of a dollar decline, with a notable rise in demand for euro-dollar call options [10][12]. - The cross-currency basis for Asian currencies and euros relative to the dollar has decreased, indicating that the cost of hedging dollar risk has become more expensive due to strong demand [12][15]. - Despite the potential for non-U.S. and alternative assets to mitigate risks associated with the dollar, the substantial positions held by foreign investors in dollar assets make a quick shift challenging [15][18]. Group 3: Potential Reversal Opportunities for the Dollar - The article identifies several potential catalysts for a dollar rebound, including a reduction in hedging demand as observed in the options market [18][22]. - The dollar index is approaching long-term support levels, and the U.S. productivity advantage may provide a basis for a rebound if market sentiment shifts [22][25]. - Political factors, such as Trump's focus on revitalizing U.S. manufacturing, may also influence the dollar's status, as a weak dollar is not necessarily aligned with his long-term goals [25][26]. Group 4: Interest Rates and Federal Reserve Independence - The article discusses the complex implications of potential interest rate cuts by the Federal Reserve, influenced by Trump's pressure, which could lead to varied outcomes for the dollar depending on economic data [27][28]. - Four scenarios are outlined regarding the interaction between U.S. economic data, Trump's influence on the Fed, and the resulting impact on the dollar's value [28][29]. - The influence of the debt ceiling on dollar liquidity is deemed limited, with current market conditions suggesting a more stable dollar environment despite potential increases in Treasury supply [31][33].

Core Viewpoint - The traditional safe-haven status of the US dollar is facing significant challenges this year, with a notable weakening of its risk-hedging properties, prompting global investors to rethink their foreign exchange hedging strategies [1][2]. Group 1: Weakening Safe-Haven Status - The dollar has frequently depreciated during US stock market pullbacks this year, with the probability of simultaneous declines in stocks and the dollar rising from a historical average of 16% to 33% [2]. - The simultaneous decline of stocks, US Treasuries, and the dollar has become more frequent, indicating a decrease in the overall attractiveness of US assets [2]. Group 2: Factors Limiting Dollar Recovery - High policy uncertainty, including issues related to tariff policies and Federal Reserve independence, is a primary reason for the dollar's inability to quickly regain its traditional safe-haven status [3]. - The trend of capital diversification and a narrowing advantage in US returns further supports the rationale for portfolio diversification away from the dollar [3]. - Concerns over fiscal stability may resurface, potentially triggering a negative feedback loop of "widening spreads leading to dollar depreciation," exacerbating fears of capital outflows and Treasury sell-offs [3]. Group 3: Adjustments in Foreign Exchange Hedging Strategies - Goldman Sachs' quantitative analysis indicates a significant change in the effectiveness of foreign exchange hedging strategies, with foreign investors achieving higher average returns on hedged US stocks compared to unhedged strategies over the past six months [4]. - European investors have seen the most substantial benefits from hedging strategies, while Canadian investors have also experienced improved results [4]. - Despite the benefits, hedging costs remain a limiting factor for some investors, although a potential Fed rate cut may encourage adjustments from investors in regions with lower domestic rates, such as Japan [4]. Group 4: Potential for Continued Dollar Depreciation - While Goldman Sachs does not foresee a permanent shift in the dollar's safe-haven appeal, the current environment resembles a mild depreciation similar to 2017 rather than a historical crash [5]. - The increasing pathways leading to dollar weakness and the rising likelihood of atypical correlations suggest a risk of more significant and prolonged depreciation than currently anticipated [5]. - A potential cycle of "capital flight leading to dollar decline leading to further capital flight" could result in a more substantial and longer-lasting depreciation than expected [5].

Core Viewpoint - TSMC is injecting $10 billion into its overseas subsidiary to hedge against currency risks, marking its largest capital operation to date aimed at reducing foreign exchange hedging costs and enhancing capital flexibility in managing currency risks [1][3]. Group 1: Capital Injection Details - TSMC Global Ltd. has approved a plan to issue new shares worth $10 billion to its parent company, aimed at increasing capital to lower foreign exchange hedging costs [1]. - This capital injection is primarily for general investments, including bank deposits and bonds, and is intended to transfer TSMC's foreign exchange holdings to its subsidiary [3]. - This marks TSMC's third similar operation since 2024, with the scale significantly exceeding previous injections, all occurring during periods of New Taiwan Dollar appreciation [3]. Group 2: Currency Risk Management - The capital injection will provide TSMC Global with greater capital flexibility to manage currency risks, particularly in light of the recent strengthening of the New Taiwan Dollar [3]. - The strengthening of the New Taiwan Dollar has raised concerns about the export-oriented economy of Taiwan, impacting TSMC's operating profit margins by several percentage points [2][7]. - TSMC's CEO has indicated that the strong local currency has directly affected the company's commercial performance, highlighting the impact of currency fluctuations on profitability [7]. Group 3: Market Context - The New Taiwan Dollar has recently shown strong performance, with significant fluctuations leading to increased hedging costs, reaching the highest implied volatility levels since 2011 [4]. - The appreciation of the New Taiwan Dollar negatively affects Taiwanese exporters, as it reduces the amount of local currency received from overseas sales or necessitates higher prices abroad, risking demand decline [7].

Core Viewpoint - The article discusses the significant decline of the US dollar in the first half of 2025, highlighting its worst performance in decades, driven by various factors including geopolitical uncertainties and changing investor behaviors [2][4]. Group 1: Dollar Decline - The Bloomberg Dollar Index has dropped over 8% this year, marking the worst start to a year on record, while the ICE Dollar Index has seen a decline of approximately 9%, potentially the worst performance since 1986 [2]. - Richard Chambers from Goldman Sachs anticipates that the dollar's weakness will continue as foreign investors increase their currency hedging [4][5]. Group 2: Foreign Demand and Investment Trends - Analysts suggest that the significant drop in the dollar index is largely due to uncertainties stemming from US policies, particularly those of President Trump, which have shaken investor confidence [6]. - Although there are no clear signs of a mass withdrawal from the US bond market by foreign investors, Chambers predicts a decrease in foreign demand, particularly as European investors may prefer to invest domestically [6][7]. Group 3: Currency Swap Indicators - A recent indicator in the foreign exchange market, the cross-currency basis swap, has shown a notable shift, signaling a decrease in demand for the dollar [8][11]. - Analysts from Morgan Stanley and Goldman Sachs have observed that the willingness of investors to purchase dollar-denominated assets is declining, while interest in euro and yen-denominated assets is increasing [11][12].

Group 1 - The Bloomberg Dollar Index has fallen over 8% year-to-date, while the ICE Dollar Index has seen a decline approaching 9%, marking the worst start in nearly 40 years [1] - Changes in interest rates are identified as the catalyst for the dollar's decline, with market expectations leaning towards a loosening cycle before 2026 despite the Federal Reserve's stance on maintaining higher rates for longer [3] - The increase in foreign exchange hedging ratios indicates that the future trajectory of the dollar will rely more on fundamentals rather than mere capital flows [4] Group 2 - Investors are shifting from traditional safe-haven assets like the dollar to derivatives for currency hedging, which has led to additional selling pressure on the dollar during settlement [3] - The potential for the dollar to further decline to the 101-102 index range exists if core inflation continues to fall and the Federal Reserve shifts its stance [4] - The focus for investors should transition from directional bets on the dollar to managing volatility, as the primary variables influencing dollar fluctuations have shifted from unilateral interest rate differentials to multidimensional risk pricing [4]

Core Viewpoint - The significant decline of the US dollar in the first half of 2025 is attributed to various factors, including increased currency hedging by foreign investors and uncertainty stemming from US policies, particularly those of President Trump [1][3][4]. Group 1: Dollar Performance - The Bloomberg Dollar Index has dropped over 8% year-to-date, marking the worst annual start on record [1]. - The ICE Dollar Index has also seen a decline of approximately 9%, potentially leading to its worst performance in at least 37 years [1]. Group 2: Foreign Investment Trends - Richard Chambers from Goldman Sachs anticipates a continued weakening of the dollar, with foreign investors increasing their currency hedging due to heightened volatility [3]. - Foreign demand for US securities, which has doubled over the past decade to $31 trillion, is expected to weaken as European investors may prefer local markets [3][4]. Group 3: Currency Swap Indicators - Recent changes in cross-currency basis swaps indicate a declining preference for the dollar, with increased demand for currencies like the euro and yen [6]. - Analysts from Morgan Stanley and Goldman Sachs note that the willingness to purchase dollar-denominated assets is decreasing, contrasting with historical trends where the dollar was favored during times of market uncertainty [6][7]. Group 4: Market Dynamics - The cross-currency basis swap is crucial as it sets the long-term pricing for foreign exchange hedging and indicates shifts in asset flows between economies [6]. - Guneet Dhingra from BNP Paribas highlights significant cross-border capital movements, particularly from the US to Europe, suggesting a potential shift in investment strategies [7].

Group 1 - Goldman Sachs' global head of repurchase trading, Richard Chambers, indicates that the dollar may continue its worst annual start on record as foreign investors increase their foreign exchange hedging efforts [1] - The Bloomberg Dollar Index has dropped over 8% this year, marking the worst annual start on record, influenced by unpredictable policies from former President Trump that have shaken investor confidence [1] - Foreign investors' holdings of U.S. securities have doubled to $31 trillion over the past decade, including stocks, government bonds, and corporate bonds [1] Group 2 - There are currently no signs of a large-scale withdrawal of foreign investors from the U.S. bond market, but Chambers predicts a gradual weakening of foreign demand [3] - European countries are increasing fiscal borrowing and spending, enhancing the euro's depth as an alternative reserve currency, leading European investors to prefer local markets [3] - Chambers notes that investors are likely to favor nationalism and localized investments over shifting to the dollar, resulting in the U.S. relying more on domestic buyers to absorb growing debt [3] Group 3 - Bridgewater's interest rate strategy head, Alex Schiller, highlights the challenge of finding potential buyers for the expanding debt, which is a global issue [3] - Schiller points out that U.S. 10-year Treasury bonds have performed the best among major bond markets this year [3] - The structural adjustments in Japan and Europe are more significant than in the U.S. as central banks reverse their policies to combat inflation [3] - Gold has emerged as the biggest beneficiary as governments worldwide compete to expand their debt [3]

Group 1 - The USD/JPY exchange rate is currently experiencing fluctuations, with a recent drop to 145.4460, reflecting a 0.48% decrease, primarily due to ongoing geopolitical tensions in the Middle East and energy concerns [1] - The USD/JPY rate rose from 146.00 to 147.21, surpassing the declining 100-day moving average at 146.80, indicating a strong upward trend since reaching a high of 147.66 on May 14 [1] - Traders are holding a significant long position in JPY amounting to $12.5 billion, and a close above the Ichimoku cloud could trigger short covering, with the 200-day moving average at 149.66 [1] Group 2 - Bank of America strategists recommend buying USD/JPY to hedge against escalating geopolitical risks in the Middle East, as Japan heavily relies on oil imports from the region [2] - The target price for USD/JPY is set at 152.0, with a stop-loss at 142, considering Japan's dependence on oil imports and potential fiscal risks ahead of the July 20 Senate elections [2] - The USD/JPY rate has fluctuated between 145.70 and 146.16, with support levels provided by the 100-hour and 200-hour moving averages at 145.71 and 144.96, respectively [2]

美元已连续五个月走弱，上个月一项悲观指标触及极端水平。如今，距离美联储下一次利率决议仅剩六天，期权 市场暗示美元将进入相对平静期。 据法国巴黎银行（BNP Paribas）策略师称，欧洲养老基金已开始增加外汇对冲，这一趋势持续将导致大量美元抛 售。 尽管美元处于三年低位，但期权交易员押注这一全球储备货币的疯狂抛售潮将在未来几周内逐渐消退。 该行分析显示，仅在荷兰和丹麦——欧洲私人养老金规模最大的两个国家，基金经理已将未对冲美元敞口占总资 产的比例从去年的23%降至4月的20%。策略师称，若进一步降至15%，将意味着再抛售2170亿美元。 丹麦（绿）、德国（蓝）养老基金的对冲比率 市场参与者正密切监控外汇对冲的趋势，以判断美元下跌空间。美元跌至三年多低位加剧了美国以外资产管理人 未对冲美股投资的损失。 "欧元区投资者已开始减少美元敞口，"亚历克斯·杰科夫（Alex Jekov）领导的策略师团队周四在报告中写道，建 议投资者押注欧元兑美元涨向1.20，"我们仍认为美元走弱主要受更高对冲比率驱动，而非对美国资产的主动抛 售。" 策略师称，丹麦养老基金自年初以来已减少370亿美元的美元敞口，3月和4月在欧元上涨时首次 ...

金十数据6月12日讯，法巴银行分析师在一份报告中表示，欧洲投资者已经开始减少对美元的敞口，而 且"更多"的风险还在后头。法巴银行押注欧元兑美元进一步走强，目标升至1.20。该行分析显示，荷兰 养老基金第一季度将外汇对冲比率提高了3个百分点。丹麦养老基金今年已经削减了370亿美元的美元敞 口。分析师们表示，随着汇率上升，丹麦养老基金首次成为欧元兑美元的大买家。 法巴银行：欧洲养老金减少美元敞口 ...