Despite the US dollar having jumped by nearly 20 per cent so far this year, hedge funds still think there’s more to come from the greenback as the US Federal Reserve ,looks to curb inflation with tighter monetary policy, according to a report by The Financial Times.
The report cites data from the US Commodity Futures Trading Commission as US dollar advancing against the Canadian dollar, Japanese yen and euro than they are on it falling. Brevan Howard, one of the world’s biggest macro funds, is among the firms that have been betting on dollar strength, according to a recent investor letter.
London-based Aspect Capital, which manages about $9bn in assets, is also still long the dollar against the yen and euro, according to a letter to investors seen by the Financial Times, and also against sterling and other currencies.
The greenback is on course for its biggest annual gain on record having climbed 18 per cent against a basket of six peers already this year, on the back of rising interest rates and a darkening economic outlook.
The Fed has been more vigorous in tightening its monetary policy than either the Bank of England or the European Central Banks, raising interest rates by significant 0.75 percentage points at each of its past three meetings and drawing in additional foreign capital as as result. The greenback has also benefited from its traditional status as a safe haven asset during times of market stress and volatility.
