After hitting a 33-month low in late April, the dollar has bounced back with a vengeance. And that has led FX Concepts to drop its bearish stance on the currency. The firm is the world’s largest currency hedge fund manager, with almost $9 billion under management.
The dollar has gained 4 percent against the euro in the last two weeks alone. That has turned into a problem for FX Concepts, which has shorted the dollar, The Wall Street Journal reports.
The firm's flagship Global Currency Program has dropped 5 percent so far this month, thanks partly to the dollar’s rebound. Until last week FX Concepts wasn’t worried about a long-term rally by the greenback, but now it’s starting to reconsider.
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"We've cut our dollar 'shorts' position substantially," Scott Ainsbury, a senior portfolio manager at the fund, told The Journal. "There are maybe some indications that [this rally is] going to be a little bit longer lasting."
His thinking is that signs of a global economic slowdown could push global investors to seek the dollar as a safe haven.
Not everyone is turning bullish toward the dollar, however.
“For the dollar to stabilize or even to rally, investors need to be convinced of the case for additional long-term investments in the U.S.,” Goldman Sachs analysts wrote in a report to clients.
“The growth outlook remains less compelling in the U.S. than in many other regions or countries.”
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