Hedge Funds Aban­don­ing Dol­lar’s Big­gest Bull Run

The Economic Times - - Commodities Plus -

Lananh Nguyen & Rachel Evans

Hedge funds are close to call­ing it quits on the dol­lar’s best run in a gen­er­a­tion.

Large spec­u­la­tors cut net bullish po­si­tions on the green­back to the low­est in al­most two years last week. If they keep trim­ming at the cur­rent pace, those bets will be wiped out en­tirely by the end of the month. Cur­rency op­tions are sig­nalling a less than one-in-four chance the green­back will ex­tend its twoyear, 25% surge against the euro in 2016, while against the yen the like­li­hood is less than one in 10. As hedge funds aban­don dol­lar wa­gers, in­vestors and strate­gists have low­ered their out­look for the cur­rency. The Bloomberg Dol­lar Spot In­dex slumped 3.9% in March, its big­gest monthly drop since 2010, as Federal Re­serve Chair Janet Yellen sig­nalled that the cen­tral bank would act “cau­tiously” as it looks to raise in­ter­est rates. Con­tin­ued dol­lar weak­ness would be good news for US com­pa­nies that have seen their profit eroded the past two years by cur­rency ef­fects.

“We’re def­i­nitely near the end for the dol­lar bull run if we have not al­ready seen the peak,” said Bren­dan Mur­phy, di­rec­tor at Stan­dish Mel­lon Asset Man­age­ment. “We’re clearly in this top­ping-out process.” — Bloomberg

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