No wild ride: FX swings fall as extreme dollar bets unwound

A surprisingly close U.S. election contest caused the dollar to swing around in cash markets on Wednesday but derivatives market “fear” gauges showed implied currency volatility declining from multi-year highs as big bets on a weaker dollar were unwound. Unlike in March, when the coronavirus crisis unleashed mayhem in markets, reactions were relatively contained with a 1% jerk higher in the dollar abating as vote counting progressed and diluted President Donald Trump’s early lead. Overnight gauges of euro-dollar implied volatility had surged on Tuesday to their highest levels in more than three years, and similar though less dramatic moves were seen in yen and sterling gauges.

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