How to hedge the $USD?

Quote from drukes1234:

By doing what Daal, buying the CAD futures? Right now based on the positions I currently hold in USD that would over expose myself to the CAD
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So buy more cash USD at your broker, to offset the futures hedge perfectly.

E.g. buy 1 CAD future, and hold the equivalent amount long in USD at your brokerage account. You are then totally hedged on your cash balances.

You still have risk on your future earnings, but that is a lot riskier to hedge.

As for your question about the interest rate - you are being charged 6% per annum by IB to be short dollars. You will earn interest on your CAD balances, this will offset most of the 6% you are being charged.

However, 6% is a ripoff interest rate. Use the futures instead.
 
The amount is not exactly the same. There are tax consequences to your hedge. If you make or lose money on the futures you have to pay or deduct from taxes. You have to put on more than the amount of USD have.

Quote from Cutten:

So buy more cash USD at your broker, to offset the futures hedge perfectly.

E.g. buy 1 CAD future, and hold the equivalent amount long in USD at your brokerage account. You are then totally hedged on your cash balances.

You still have risk on your future earnings, but that is a lot riskier to hedge.

As for your question about the interest rate - you are being charged 6% per annum by IB to be short dollars. You will earn interest on your CAD balances, this will offset most of the 6% you are being charged.

However, 6% is a ripoff interest rate. Use the futures instead.
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