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Alternative Market Briefing

Hedge funds betting on U.S. dollar weakness for first time in two years

Monday, April 25, 2016

Komfie Manalo, Opalesque Asia:

Hedge funds and large speculators are abandoning the U.S. dollar and are betting on the currency’s weakness for the first time in almost two years, since July 2014, reported Money Web.

Data from the Commodity Futures Trading Commission showed that hedge funds positions that benefit from a weak U.S. dollar exceeded those that benefited from a rally as of end April 17 by a net 21,567 contracts. This is the first time since July 2014 when the CFTC have not reported net long positions for the U.S. currency against eight other major currencies.

Over the past two years, buying the U.S. dollar netted profits for hedge funds and other large speculators, benefitting from the decision by the Federal Reserve to raise interest rates even as the massive quantitative easing in Europe and Japan, coupled with a China-led slowdown in emerging markets, have resulted to the weakening of rival currencies.

Since mid-2004, the U.S. dollar has jumped more than 20% and reached its peak towards the end of January. However, the U.S. central bank reduced its growth forecasts last month on the back of slowing economy and rising inflation.

The report quoted Mazen Issa, senior foreign-exchange strategist at Toronto-Dominion Bank in New York as saying, "The March meeting sent a message that we don’t have any rush changing the rates profi......................

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