The US dollar is poised to tumble further as Canadian investors — among the largest holders of American stocks — face pressure to raise their currency hedges against the greenback, according to TD Securities.
“The loss of the dollar’s safety appeal since the start of the year has increased the need for these funds to hedge their long US asset exposure,” a TD Securities team including Jayati Bharadwaj, Mark McCormick and Linda Cheng wrote in a Friday report. More losses for the US currency “will give Canadian investors a greater push to adapt their hedging policies which can create further downward pressure on the cross.”
