State Street: US investors cutting overseas hedging puts pressure on the dollar.

State Street stated that the primary reason for the dollar's decline earlier this year was that U.S. investors reduced their foreign exchange hedging of overseas investments, rather than that global investors increased their hedging of U.S. portfolios. "The more noticeable activity came from U.S. domestic investors adjusting their overseas hedging," Chris Pizzotti, global head of foreign exchange sales and trading at State Street Markets, said Wednesday at the Federal Reserve Bank of New York's Foreign Exchange Market Structure Conference. "We estimate that U.S. domestic investors have halved their hedging, which has actually contributed to the dollar's weakness. The uncertainty surrounding Liberation Day remains, naturally sparking discussions about de-risking."