Wed, Nov 25, 2015
Welcome Guest
Free Trial RSS
Get FREE trial access to our award winning publications
Industry Updates

Oil hovers below $80 as hedge funds mounts pressure against the euro

Tuesday, March 02, 2010
Opalesque Industry Update - Oil prices are hovering below $80 this week as pressure is mounting against the euro from speculators and hedge funds, various media reports said.

Oil prices dropped 1.2% in New York on Monday as the dollar advanced against the euro after a top European Union official told Greece to meet its deficit target this year, reported. As of 11:05am Singapore time on Tuesday, crude oil for April delivery was at $78.80 a barrel, up 10 cents, in electronic trading on the New York Mercantile Exchange. The contract fell 96 cents to $78.70 on Monday. Futures were down 0.7% this year.

Last week, crude oil broke through the $80 a barrel but kept falling back as big hedge funds bet against the euro. The fiscal drama in Greece added burden against the euro even after U.S. Federal Reserve chairman Ben Bernanke disclosed that the U.S. would retain its low interest rate, reported. Fears on the Greek economy only pushed the euro down compared to the U.S. dollar, thus affecting crude prices.

Soros bets against the euro
Hedge fund billionaire George Soros, through his Soros Fund Management, recently said he believes the euro “may not survive.” A report by said that traders and other hedge funds, including Soros, have been accused of short selling the euro and bet nearly $8bn against the single currency.

Previously, Soros warned that the euro could fall apart even if the European Union forges a bailout deal for the bankrupt Greek economy. Soros was quoted as saying: “Makeshift assistance should be enough for Greece, but that leaves Spain, Italy, Portugal and Ireland. Together they constitute too large of a portion of euroland to be helped in this way.”

Hedge funds heavyweights conspiring against euro
Soros, together with a group of secretive Wall Street hedge fund bosses were believed to have met at an “ideas dinner” at a private townhouse in Manhattan on 8-Feb to “plot to cash in on the fall of the euro.” Soros Fund Management was represented at the dinner, during which guests discussed, among other things, the decline of the euro against the dollar, reports said. Hedge fund titan SAC Capital Advisors was also said to have attended. Subsequent reports indicated that big hedge funds had launched large bearish bets against the euro since last week that were, said on Friday, “reminiscent of the trading action at the height of the U.S. financial crisis in 2008.”

Euro plunged in value
On 25-Feb or two days after Soros made the warning, the euro hit a one-year low against the yen in Asian trading. A dealer at a major Tokyo bank told that hedge funds, retail and institutional players accelerated euro-selling for the Japanese currency as news said that Standard & Poor’s Rating Services had warned to it would downgrade Greece by one or two notches by March.

The euro traded at $1.51 in December, but has since fallen to $1.34.

However, the Royal Bank of Scotland Plc (RBS) expressed confidence on Monday that the euro would rise to $1.40 as European officials work on a rescue package for Greece, easing concern of “default and contagion.” Greg Gibbs, a currency strategist at RBS, said that the 16-nation currency is also poised to advance after futures traders placed a record amount of bets that it will weaken, paving the way for a reversal of sentiment.
Precy Dumlao.

What do you think?

   Use "anonymous" as my name    |   Alert me via email on new comments   |   
Today's Exclusives Today's Other Voices More Exclusives
Previous Opalesque Exclusives                                  
More Other Voices
Previous Other Voices                                               
Access Alternative Market Briefing

  • Top Forwarded
  • Top Tracked
  • Top Searched
  1. Investing - BlackRock targets ETF investors with flexible currency hedging, Nelson Peltz bets on General Electric Company and Mondelez International, Apple plummets to 4th place among hedge holdings, from No. 1, Top Q3 equity purchases and sales of top 50 hedge funds[more]

    BlackRock targets ETF investors with flexible currency hedging From BlackRock Inc., the world’s largest asset manager, is changing course on exchange-traded funds that protect against currency volatility. After stressing the easy switch between hedged and unhedged ET

  2. Chicago-based Achievement A. M. is shutting down hedge fund following losses[more]

    Komfie Manalo, Opalesque Asia for New Managers: Achievement Asset Management, a Chicago-based hedge fund firm, has announced it is closing down its hedge fund operation following losses on energy market bets this ye

  3. Lyxor Hedge Fund Index up 0.1% (+0.4% YTD) as global macro and CTAs outperform[more]

    Komfie Manalo, Opalesque Asia for New Managers: Global macro and CTAs outperformed the hedge fund space and delivered positive returns last week amidst difficult market conditions, with the Lyxor Hedge Fund Index up

  4. BlackRock is shutting down its Global Ascent macro fund[more]

    Komfie Manalo, Opalesque Asia: BlackRock, the world’s largest asset manager, has announced plans to shut down a macro fund, Global Ascent Fund, because of "headwinds facing the industry". The hedge fund, which makes bets on stock, bond and currency markets, will return money to investors. Ac

  5. Opalesque Roundtable: Seeding deal terms can be onerous for hedge funds[more]

    Benedicte Gravrand, Opalesque Geneva for New Managers: Executives from fund of funds firms, family offices, a placement agent, a private equity firm, and an accounting firm gathered in Connecticut last month for the