Are currency hedged solutions the answer to market volatility?

Townsend Lansing, head of short/leveraged and FX platforms at ETF Securities, explains how currency hedging in the ETP space can be used to exploit market dislocations

Financial markets have all been strongly impacted by the actions of key monetary authorities since 2008, with the foreign exchange market particularly feeling the effects.  Currency volatility has trended upwards in the past year and looks set to remain elevated (see chart). Diverging monetary policy, volatile commodity prices and the economic future of China are all uncertain factors that will keep currency markets from stabilising in the near future.  The Federal Reserve has adopted a data-dependent approach in determining the timing of its first interest rate hike, exacerbating mar...