Analysts at Citi outline a scenarios where FX volatility rises. Yeah, I hope they're right!

(Hope being the 4 letter word in the headline)

Citi's reasoning (in very brief) goes along the lines:

  • If the USD falls, European investors may move quickly to hedge their foreign-bond holdings
  • which would accelerate USD losses
  • thereby triggering FX market volatility higher

All hinges on a falling USD.