(Bloomberg) -- Hedge funds turned bearish on the dollar for the first time since May 2018, an indication that a summer slump in the world’s reserve currency will be prolonged.
Net futures and forward positions held by leveraged funds against eight other currencies dropped to minus 7,881 contracts last week, according to data aggregated from the Commodity Futures Trading Commission. The swing was driven by growing bullish bets on the euro.
The dollar has come under increasing pressure since late March after the Federal Reserve pledged unlimited liquidity to support an economy hurt by the coronavirus pandemic. The central bank’s near-zero rate policy and asset purchases have also driven down inflation-adjusted 10-year yields to an all-time low, making U.S. assets less attractive.
“The drop in the dollar is a reversal from the surge in March, especially given the currency had looked overvalued,” said Yujiro Goto, head of foreign-exchange strategy at Nomura Holdings Inc. “A slide in U.S. real yields has also accelerated that move.”
A Fed index measuring dollar strength reached a record high in the second half of March as investors piled into haven assets during the worst of the virus-induced market volatility. The gauge has slid more than 7% since amid signs that other major economies are coping better with the pandemic outbreak.
U.S. policy makers and derivatives traders both expect the policy rate to remain at current levels at least until the end of next year. Inflation may start to quicken from the second quarter of 2021 due in part to the low base this year, according to economist estimates compiled by Bloomberg.
“Dollar weakness is likely to persist against Group-of-10 currencies in September and onwards” as Fed policy remains dovish, said Goto.
For more articles like this, please visit us at bloomberg.com
Subscribe now to stay ahead with the most trusted business news source.
©2020 Bloomberg L.P.
"short" - Google News
August 17, 2020 at 11:31AM
https://ift.tt/3atDNUO
Hedge Funds Are Short on the Dollar for First Time in Two Years - Yahoo Finance
"short" - Google News
https://ift.tt/2SLaFAJ
No comments:
Post a Comment