JPY Takes Gold

The US dollar, often expected to take the top podium in the ongoing competition of currencies, has found itself ousted by a recent underdog: Japan.

FX hedging utilizes financial instruments known as derivatives to manage the risk of currency fluctuations. Derivatives are contracts that allow the user to establish in advance the precise price they will pay for a currency transaction in the future.

The Canadian economy is closely linked to its neighbor to the South, and the Bank of Canada has kept interest rates nearly equal to those in the US. This has resulted in a recent period of low volatility in the USDCAD pair.

Global companies are faced with the challenge of managing the effects of currency market movement on their business. International businesses utilize a variety of products and strategies to minimize losses due to FX fluctuations.