The cost of hedging against fluctuations in the US dollar has reached its highest level since 2022 due to concerns surrounding the upcoming presidential election.

Traders are preparing for significant market volatility, as shown by a surge in one-week implied volatility on the Bloomberg Dollar Spot Index, which has not been seen since December 2022. This increase in volatility indicates expectations of substantial currency swings against major counterparts such as the euro, yen, Chinese yuan, and Mexican peso.

Consequently, the prices of options designed to protect against these potential movements have risen sharply, indicating a cautious approach among market participants ahead of the election.