Investors are getting creative in the way they bet on the diverging path for interest rates across major economies as they look for ways to sidestep volatility in the dollar, using European currencies instead to fund bets on the yen.
Dollar-based strategies are being tested by the uncertainty U.S. President Donald Trump’s trade tariff plans have unleashed on markets. Investors are questioning whether the U.S. president’s proposals will prove a bullish driver for the greenback, or turn out to be more of a negotiating tactic.
As an alternative way of wagering on yen strength, some firms are using strategies involving European currencies, rather than the dollar, to profit from a widening rate differential with Japan.
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