Breaking News
Investing Pro 0
New Year’s SALE: Up to 40% OFF InvestingPro+ CLAIM OFFER

Hedge Funds Running Biggest Dollar Short Since 2017 Risk Squeeze

Currencies Sep 28, 2020 11:45AM ET
Saved. See Saved Items.
This article has already been saved in your Saved Items
 
© Reuters. Hedge Funds Running Biggest Dollar Short Since 2017 Risk Squeeze
 
JPM
-0.35%
Add to/Remove from Watchlist
Add to Watchlist
Add Position

Position added successfully to:

Please name your holdings portfolio
 
INGA
-0.32%
Add to/Remove from Watchlist
Add to Watchlist
Add Position

Position added successfully to:

Please name your holdings portfolio
 
ICE
-0.10%
Add to/Remove from Watchlist
Add to Watchlist
Add Position

Position added successfully to:

Please name your holdings portfolio
 
DX
-0.03%
Add to/Remove from Watchlist
Add to Watchlist
Add Position

Position added successfully to:

Please name your holdings portfolio
 
TD
-0.11%
Add to/Remove from Watchlist
Add to Watchlist
Add Position

Position added successfully to:

Please name your holdings portfolio
 

(Bloomberg) -- Hedge funds that have racked up the largest bets against the dollar in almost three years may be running headlong into a short squeeze.

With markets on edge over resurgent coronavirus cases and a contentious U.S. presidential election, predictions of the currency’s demise as the world’s number one haven appear premature. Investors went into the greenback’s strongest rally since April last week expecting losses in all-but-one of the Group-of-10 currencies versus the dollar, the first time since 2013, according to ING Groep (AS:INGA) NV data.

Few of those bets have been covered, according to the latest data. Speculative positions in futures linked to the ICE (NYSE:ICE) U.S. Dollar Index turned the most negative since November 2017, according to Commodity Futures Trading Commission data through Sept. 22. That suggests speculators may only be beginning to enter a world of pain.

“Dollar shorts were at multi-year highs, you surely cannot assume they have all been trimmed last week,” ING currency strategist Francesco Pesole said by e-mail. “There is definitely more room for the dollar to benefit from position-squaring.”

It serves to highlight the perils of taking wagers out against the dollar against the multitude of uncertainties reaped by the global pandemic. Toronto Dominion Bank (NYSE:TD) described international foreign-exchange markets as between “rock and a hard place” while JPMorgan Chase (NYSE:JPM) & Co. said last week that the seasons had shifted into a “dangerous” year-end trading cycle, which promised to be “two-directional” for the dollar.

Throughout the summer, talk of a V-shaped recovery and trillions of dollars of stimulus had boosted reflation trades over defensive assets like the dollar. But the latest Federal Reserve policy meeting fell short of any concrete steps for more stimulus even while pandemic restrictions threaten to stifle economic green shoots.

“I wish we had been long,” said Mark Dowding, chief investment officer at BlueBay Asset Management who turned neutral after closing his short position on the dollar last month. “Economic data has shown signs of disappointment, Covid is getting worse and additional stimulus is not forthcoming.”

©2020 Bloomberg L.P.

 

Hedge Funds Running Biggest Dollar Short Since 2017 Risk Squeeze
 

Related Articles

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with other users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind:  

  •            Enrich the conversation, don’t trash it.

  •           Stay focused and on track. Only post material that’s relevant to the topic being discussed. 

  •           Be respectful. Even negative opinions can be framed positively and diplomatically. Avoid profanity, slander or personal attacks directed at an author or another user. Racism, sexism and other forms of discrimination will not be tolerated.

  • Use standard writing style. Include punctuation and upper and lower cases. Comments that are written in all caps and contain excessive use of symbols will be removed.
  • NOTE: Spam and/or promotional messages and comments containing links will be removed. Phone numbers, email addresses, links to personal or business websites, Skype/Telegram/WhatsApp etc. addresses (including links to groups) will also be removed; self-promotional material or business-related solicitations or PR (ie, contact me for signals/advice etc.), and/or any other comment that contains personal contact specifcs or advertising will be removed as well. In addition, any of the above-mentioned violations may result in suspension of your account.
  • Doxxing. We do not allow any sharing of private or personal contact or other information about any individual or organization. This will result in immediate suspension of the commentor and his or her account.
  • Don’t monopolize the conversation. We appreciate passion and conviction, but we also strongly believe in giving everyone a chance to air their point of view. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.
  • Any comment you publish, together with your investing.com profile, will be public on investing.com and may be indexed and available through third party search engines, such as Google.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.

Write your thoughts here
 
Are you sure you want to delete this chart?
 
Post
Post also to:
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
 
Are you sure you want to delete this chart?
 
Post
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's Investing.com's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Continue with Google
or
Sign up with Email