Citigroup revealed on Monday that its hedge fund clients sold US dollars on Friday after the Supreme Court ruled against Trump’s tariffs. The DXY index fell into volatile waters on Friday, going from 98 to 97, and remained unstable in the charts. The US Supreme Court ruled that most tariffs imposed under President Donald Trump in 2025 were illegal. The President expressed his disappointment, calling it a “very unfortunate ruling” and “countries want to keep the deal that they already made.”
Citing trouble in the currency markets, Citigroup’s hedge fund clients offloaded US dollars t o safeguard their investments. “Citi’s hedge fund clients were net USD sellers around and after the tariff ruling,” Kristjan Kasikov, Global Head of Citi FX Quant Investor Solutions, told Reuters. The tariff shake-up has muffled the markets as Trump is now considering replacing tariffs with income tax. Trump defended the trade deals after the Supreme Court ruling, and a new income tax could take its place.
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After Hedge Funds Sold US Dollars, Which Currency Benefited the Most?
Kasikov revealed that the Australian dollar saw an increase in inflow after Citi’s hedge fund clients offloaded US dollars. He explained that the AUD was the most bought currency among the currency pairs. He further said that emerging currencies in Asia and South America also received some inflows. “Emerging market currencies, particularly in Asia and Latin America, also saw some inflows,” he said. Therefore, while the hedge funds were selling the US dollars, they were also taking some entry positions in these currencies.
However, Citigroup’s currency positioning indicator pointed towards a moderate long US dollar position. This was mostly driven by hedge-fund and real-money client flows. A long position is a bet that institutional funds take that a financial asset will rise in value over time. The markets will react again after Trump puts forward his income tax policies on trade.
