Cross-border investors continue to hold US Dollar positions near multi-year highs, supported by robust exposure to US assets and a reduction in foreign exchange hedging, according to FX Street.
Geoff Yu from BNY highlighted that this trend reflects sustained confidence in the United States market, with fewer investors opting to hedge their currency risk despite global volatility.
For Japanese investors, this dynamic underscores the importance of monitoring USD movements closely, as shifts in US Dollar holdings can influence FX and equity markets domestically, given Japan's significant trade and investment links with the US.