FX_EM_Macro_战略_季度_展望_美元_对冲_A_trend_o_fade_

Dollar hedging: A trend or a fade? We examine hedging flows and quantify the scope for EURupside, take stock of resilient US data and a moreexpansionary US fiscal policy, and assess the prospects forEM carry and fiscal risks in EMEA. Themistoklis Fiotakis+44 (0) 20 7773 2002themos.fiotakis@barclays.comBarclays, UK LefterisFarmakis+44 (0) 20 3555 6549lefteris.farmakis@barclays.comBarclays, UK Andrea Kiguel+1 212 526 8954andrea.kiguel@barclays.comBCI, US Mitul Kotecha+ 65 6308 5439mitul.kotecha@barclays.comBarclays Bank, Singapore Marek Raczko+44 (0) 20 3134 0089marek.raczko@barclays.comBarclays, UK Shinichiro Kadota+81 3 4530 1374shinichiro.kadota2@barclays.comBSJL, Japan FX & EM Macro Strategy Quarterly Overview Dollar hedging: A trend or a fade?. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 As other dollar selling narratives become increasingly contradictory, expectations of dollarhedging flows have persisted. We develop an analytical framework around this theme. Hedgingflows could drive EUR/$ to 1.20 under certain conditions, but the risk reward is deterioratingprogressively. FX & EM Macro Strategy FX & EM Views for the Year Ahead. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39 Please find our updated FX views and forecasts across G10 and EM currencies. Thisdocument is intended for institutional investors and is not subject to all of theindependence and disclosure standards applicable to debt research reports prepared for retailinvestors under U.S. FINRA Rule 2242. Barclays trades the securities covered in this report for itsown account and on a discretionary basis on behalf of certain clients. Such trading interestsmay be contrary to the recommendationsofferedin this report. Please see analyst certifications and important disclosures beginning on page 79 .Completed: 24-Jun-25, 02:33 GMTReleased: 24-Jun-25, 04:00 GMTRestricted - External FX & EM Macro StrategyForecast Tables. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 74G10 and EM forecasts. FX & EM Macro Strategy Quarterly Overview Dollar hedging: A trend or a fade? As other dollar selling narratives become increasinglycontradictory, expectations of dollar hedging flows havepersisted. We develop an analytical framework around thistheme. Hedging flows could drive EUR/$ to 1.20 under certainconditions, but the risk reward is deteriorating progressively. Themistoklis Fiotakis+44 (0) 20 7773 2002themos.fiotakis@barclays.comBarclays, UK LefterisFarmakis+44 (0) 20 3555 6549lefteris.farmakis@barclays.comBarclays, UK EUR/$ hedging flow as the only persistent narrative:The reality has been much blander thanwhat tail risk expectations implied in April. US growth is resilient, risks from fiscal policy aremoderating, "sell US" flows have been unexceptional, and trade front-loading is smoothing theimpact oftariffs.More recently, higher oil prices have boosted the USD against Asiancurrencies. Yet, the dollar has remained weak against the EUR, with hedging flows the mostplausible proximate driver. Andrea Kiguel+1 212 526 8954andrea.kiguel@barclays.comBCI, US Mitul Kotecha+ 65 6308 5439mitul.kotecha@barclays.comBarclays Bank, Singapore No "no-brainer":To hedge the USD without selling the underlying asset is time-inconsistent.Converting to EUR instead of to domestic currency (due to size and policy constraints) addsboth to risks (via a layer of balance sheet and volatility) and to costs. Ultimately, there will belimits to third-currency hedging. We try to approximate those limits by applying threedifferentmacro frameworks. Marek Raczko+44 (0) 20 3134 0089marek.raczko@barclays.comBarclays, UK Risks of EUR/$ breaching 1.20 but with diminishing benefits:In our frameworks, some macroscenarios could lead EUR/$ to 1.20 or slightly above. Yet, whether investors project a forwarddecline in hedge costs via lower US rates, or near-term IIP imbalances get resolved via FXweakness or simply that investors stop hedging above "fair value", the risk-reward of chasingthe EUR at 1.20 or beyond, increasingly deteriorates. This is especially true considering thehigher EUR/$ forwards, the high levels of EUR TWI and thetariff-drivenEuropean terms-of-tradedeterioration. Shinichiro Kadota+81 3 4530 1374shinichiro.kadota2@barclays.comBSJL, Japan Skylar Montgomery Koning+1 212 526 8034skylar.montgomerykoning@barclays.comBCI, US Asian hedge flows appear manageable:In isolation, a 10% move lower in DXY would beconsistent with Asian investors raising their FX hedges by c.1.8ppt, resulting in dollar supply ofc.USD80bn, which is small relative to annual hedge flows (+/-US$180bn since 2015). Should FXhedge ratios rise to their respective 10-year averages, the incremental dollar selling wouldamount to c.USD128bn. Lemon Zhang+65 6308 5137lemon.zhang@barclays.comBarclays Bank, Singapore The war risk premium and the prospect for carry resilience:Markets are still assessing howlo