WEST PALM BEACH, FL (www.hedgeco.net) – Increasing numbers of FX hedge funds are more hopeful that the recent dollar gains may continue in the near future. Many of these managers seem to be changingtheir bearish views on the dollar, that has lost over 30 percent of its value to the euro during the past two years.
Experts believe that increasing US interest rates along with modest economic growth for the US economy has boosted the dollar�s prospects. David Greenwald, a partner at Scalene Capital Management believes that �Hedge funds are shifting their view and no longer are complacently saying that the twin deficits are sufficient reasons for the dollar to continue weakening.�
Greenwald also explained that “Hedge funds are starting to think that (interest rate) yield and U.S. economic growth may be sufficient to attract more than ample capital to fund those deficits and even strengthen the dollar.� Greenwald�s views are also supported by the recent data released by VAN Macro Sentiment Indicators. The VAN February sentiment indicator shows that about 48 percent on hedge fund managers in the survey are now bullish on the dollar and only 16 percent are bearish, while the rest of the managers remain neutral.
A New York Currency manager said hedge funds have exited their dollar short positions following the release of the new US Employment data report for January 2005. Many hedge fund managers trading currencies however are unable to predict whether the dollar decline may resume, but many believe the gains by the dollar may continue for a while longer.
John Taylor, president of the New York-based hedge fund FX Concepts, which manages over $11 billion of assets noted, “Our cyclical signals suggest this dollar rally is going to last near term. But probably in the spring, the dollar could resume its weakness and a fall to $1.23 in euro/dollar could trigger that turnaround.�.
Paul Oranika
Editor-in-Chief
HedgeCo.Net
Email: Editor@hedgeco.net
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