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But Lyxor does expect the US dollar to rise against the euro. Mr Keller also expects fresh weakness in sterling and a marked appreciation of China's renminbi over the next two quarters. Although "normal volumes" of hedge fund trades are being pumped through currency markets, Ian Headon, head of product development in Northern Trust's global alternatives business, sees a spike in demand among fund clients looking to improve currency hedging, due to market volatility. "It's impossible to get the perfect hedge, but it's our intention to get enough data to the fund manager as early as possible, to help them structure the hedging transaction," says Mr Headon, who deals with hedge fund clients in European and Caribbean jurisdictions. "A currency hedge which is executed badly can have a significant drag on performance." Damian Handzy, chairman of New York-based hedge fund consultancy Investor Analytics, suggests private banks should diversify risks by choosing a handful of "nimble" forex experts, but over-diversification, can lead to a "complicated portfolio that is difficult to manage", he warns. "There may be several 'Soroses' emerging from today's currency markets because there are so many more players in FX than in 1992. But picking them before their success is very difficult, which is why diversification isn't just about mitigating risk: it's also about having money spread around a number of managers, any of whom may be the next George Soros," believes Mr Handzy.