Hedge funds ready for the biggest end of the 1995 rally of the dollar


The number of net long positions of hedge funds on a dollar to eight key world currencies for the week ended 5 April, to the lowest level since July of 2014, according to data of the Commission on trade commodity futures, cited by Bloomberg. According to the Commission, the number of such contracts declined to 36,304 thousand to 420 thousand in November of 2015.

If speculators continue to curtail these positions at the current rate, by the end of the month all bets on rising U.S. currency will be closed. Market dynamics Forex options indicates that the chances for continued growth of the dollar against the Euro (over the last two years, the dollar strengthened to the Euro by 25%) less than 25%, and the yen – less than 10%, the Agency said.

With the reduction in rates on the rise in the dollar, investors and analysts reduce their forecasts on the dynamics of the American currency. Index Bloomberg Dollar Spot Index in March decreased 3.9% is the maximum decline since 2010. A further weakening of the dollar for the American companies, at which profits in the last two years adversely affected the performance of the national currency, according to Bloomberg.

“The growth trend of the dollar, if only the peak is not passed, definitely nearing the end, – explains the Director of the Fund Standish Mellon Asset Management Brendan Murphy. According to Murphy, he sells the dollars, but he prefers the currencies of developing economies – the Mexican peso and the Russian ruble.

Analysts change forecasts for the dollar against the yen to 16-month low, and the Euro to the lowest level since July 2015. Trade-weighted dollar index the fed has increased over the past two years by 19%, showing dynamics similar to the rally that began in 1979 and 1995. This year the indicator has decreased on 5%.

“We have reached a key point – the dollar failed to hold the previously achieved levels within the natural cycle of growth, said Vasileios Gianakis, head of the “monetary strategy” of the London branch of the UniCredit. – What can we say about the present moment, when the growth cycle is much slower in nature.”