(Bloomberg) -- Trading of currency options swelled to a record after Donald Trump’s victory in the US presidential election, as traders rushed to bet on further dollar gains.
Over $160 billion worth of contracts exchanged hands on Wednesday, the highest daily volume in data going back to 2013, according to the Depository Trust & Clearing Corporation.
Trading of euro options was four times higher than the recent average, DTCC data shows, while the EBS platform saw an all-time record for the Chinese renminbi. Most of the activity on over-the-counter trades was driven by new positions betting on a stronger dollar, according to Europe-based traders.
The dollar rallied on Wednesday as Trump emerged as the winner of the US presidential race. The expectation is his policies to reduce taxes and increase trade tariffs will fan inflation and keep interest rates elevated. The Bloomberg Dollar Spot Index reached a one-year high before paring gains later in the week.
The euro was among the biggest losers, on the view that trade tariffs will hurt the region’s growth and force the European Central Bank to cut interest rates more aggressively than the Federal Reserve.
CME Group also reported a surge in foreign-exchange volumes on Wednesday, with a total of $275 billion traded across its currency products — more than double the average daily volume observed in October. The firm noticed outsized activity in several currency pairs, including the Mexican peso and the euro.
The dollar “can be expected to head higher throughout the rest of this month against most currencies,” said Nordine Naam, a FX analyst at Natixis. That’s “in anticipation of trade tensions and the announcement of measures to support the US economy.”
--With assistance from Naomi Tajitsu.
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