Finance
Traders rush to snap up FX hedges for Greenland tariff risks
Published by Global Banking and Finance Review
Posted on January 20, 2026
1 min readLast updated: January 20, 2026
Quick Summary
Traders are securing FX hedges as Greenland tariff risks rise, affecting euro and sterling volatility. Market uncertainty grows amid potential trade war.
Traders Seek FX Hedges Amid Renewed Greenland Tariff Concerns
Impact of Tariff Risks on Currency Markets
LONDON, Jan 20 (Reuters) - Trader demand for protection against big swings in the euro in early February rose sharply on Tuesday, as concern grew over a possible rekindling of a trade war following U.S. President Donald Trump's tariff threats to Europe over Greenland.
Rising Euro Volatility
Euro two-week implied options volatility - a measure of demand for hedges against big price swings in that time - shot to almost 6%, the most since early December on Tuesday, according to LSEG data. Three-month options vol, which is considered more of a benchmark, hit its highest since late November, rising to 6.025%.
Sterling Options Performance
Implied options vol for sterling, another currency in the tariff crosshairs, rose to a two-month high of 6.464%.
(Reporting by Amanda Cooper; Editing by Dhara Ranasinghe)
Key Takeaways
- •Traders are increasingly seeking FX hedges due to Greenland tariff risks.
- •Euro volatility has reached its highest since early December.
- •Sterling options volatility has also increased significantly.
- •The potential trade war is causing market uncertainty.
- •LSEG data shows a rise in euro two-week implied options volatility.
Frequently Asked Questions about Traders rush to snap up FX hedges for Greenland tariff risks
1What is currency hedging?
Currency hedging is a financial strategy used to protect against potential losses due to fluctuations in exchange rates. It involves using financial instruments like options and futures to offset risks.
2What is foreign currency?
Foreign currency refers to money that is issued by a country other than one's own. It is used in international trade and investment, and its value can fluctuate based on economic conditions.
3What are financial markets?
Financial markets are platforms where buyers and sellers engage in trading financial assets such as stocks, bonds, currencies, and derivatives. They play a crucial role in the economy by facilitating capital flow.
4What is a trading platform?
A trading platform is software that allows investors to buy and sell financial instruments online. It provides tools for analysis, order execution, and account management.
5What are economic benefits?
Economic benefits refer to the advantages gained from economic activities, such as increased employment, improved productivity, and enhanced living standards. They contribute to overall economic growth.
