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USD hedging costs could decrease further
While total USD hedge costs could be set to decrease further as the Fed is one of the G10 central banks with real room to cut, the xCcy basis component could become more expensive. Hedgers of USD assets could decide to use the xCcy instrument. Global monetary policy rates are on the way down, almost no matter where you look. However, the “room” to ease is not the same across G10 economies, at least not via conventional rate cuts. We argued back in March that a continued slide in growth perspectives could augur FX wars, which eventually would lead to a race towards the bottom for central banks – just after we ... (full story)
