Goldman sees FX hedging accelerating dollar weakness

Goldman Sachs’ Richard Chambers says the U.S. dollar may face further pressure as foreign investors increase currency hedging on U.S. assets.

Rising hedge ratios and more FX-hedged Treasury purchases are expected amid market volatility. Chambers also sees European investors potentially reducing U.S. bond purchases in favour of local assets as fiscal spending rises, which could strengthen the euro’s status as a reserve currency. He notes the U.S. may need to rely more on domestic buyers to absorb its growing debt.

This article was written by Eamonn Sheridan at www.forexlive.com.