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The US dollar is the currency on which hedge fund managers are most bullish in the near term, research by TrimTabs Investment Research and BarclayHedge shows. 

Six in ten fund managers cite the greenback as their preferred currency investment over the next three months.

“The debt crisis in Greece, the creditworthiness of other countries in Europe, and the US dollar rally have market participants focused on currencies,” says Vincent Deluard, global equity strategist at TrimTabs. “We think currencies will dominate other investment themes throughout 2010.”

Nearly 26 per cent of hedge fund managers expect a quick resolution to the Greek crisis, while 59 per cent believe it will spread without endangering the unity of the Eurozone. Only 15 per cent of managers believe it will lead to the destruction of the euro.

“The euro is one of the few successes of the European Union in the past ten years,” says Deluard. “France and Germany will take action to protect it if this Greek tragedy infects other Eurozone members.”

Nearly all managers expect the yield on the ten-year Treasury note to remain level or rise significantly by year-end. Only seven per cent expect long-term interest rates to drop.

“Managers worried about inflation expect long-term rates to pop,” Deluard adds. “And governments on both sides of the pond are auctioning huge amounts of debt this year. Beware a bloodbath in bonds.”

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