Citigroup said on Monday that its hedge fund clients sold the U.S. dollar on Friday after the Supreme Court ruled against President Trump’s tariffs. The DXY index fell to volatile levels from 98 to 97 on Friday, and remained volatile on the charts. The U.S. Supreme Court has ruled that most of the tariffs imposed under President Donald Trump in 2025 are illegal. The President expressed his disappointment and called it “ “Very disappointing verdict” and “Countries want to maintain the agreements they have already made.”
Citing currency market problems, Citigroup’s hedge fund clients drained US dollars to protect their investments. “Citi’s hedge fund clients were net sellers of the US dollar before, during and after the tariffs. ” Christian Kasikoff, global head of CitiFX Quantitative Investor Solutions, told Reuters. The tariff overhaul is roiling markets, as President Trump is currently considering replacing tariffs with an income tax. President Trump has defended the trade deal following a Supreme Court ruling that could result in a new income tax to replace it.
Which currency benefited the most after hedge funds sold the US dollar?
Mr Kasikoff said inflows into Australian dollars had increased as Citi’s hedge fund clients offloaded US dollars. He explained that the Australian dollar was the most bought currency among the currency pairs. He also said there will be some inflows into emerging currencies from Asia and South America. “We’ve also seen some inflows into emerging market currencies, particularly in Asia and Latin America.” he said. So while hedge funds were shorting the US dollar, they were also taking entry positions in these currencies.
However, Citigroup’s Currency Positioning Indicator showed a moderate long USD position. This was primarily driven by hedge funds and real money customer flows. A long position is a bet by an institutional investor that the value of a financial asset will increase over time. Markets will likely react again after President Trump rolls out his income tax policy on trade.