Financiers Bet on Dollar'' s Slow Downward Wander
< img src="https://images.wsj.net/im-334464/social" class="ff-og-image-inserted"/ > Some financiers are betting on a sluggish, constant grind downward for the U.S. dollar.
Hedge funds and possession supervisors are scooping up derivatives that settle when the dollar decreases slowly or stays within a narrow range. In one technique, known as a strangle, traders sell both bullish and bearish choices for short periods. They can collect a premium from offering the agreements and revenue as long as the hidden currency remains stable and doesn’t activate the choices.
The bets on a calm retreat mark a shift after last year’s pandemic-heightened swings. Numerous expected the dollar to move in 2021, as global development outpaced the U.S. growth. Rather the U.S.’s rapid vaccine rollout and economic revival have supported the currency, decreasing volatility in addition to the chance for traders to earn money off swings. The WSJ Dollar Index has acquired approximately 1.4% this year.
Kristen Macleod, co-head of worldwide forex sales at Barclays, said trade techniques that involve offering volatility stand out as a clear trend at a time when hedge funds and asset managers have a greater bar for betting in currency markets than previously this year.
Hedge funds and other speculative investors have increased bets on a weaker dollar in recent weeks, though net short positions remain much less severe than they were late in 2015, data from Scotiabank and the Commodity Futures Trading Commission data show.
Published at Thu, 06 May 2021 09:30:00 +0000
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