Reuters News: U.S. Dollar's Woes Are Only Beginning, Some Bears Say

September 01, 2020

Article in Reuters News

There are dollar bears, and then there's Ulf Lindahl.

The chief investment officer of currency manager A.G. Bisset believes the U.S. currency will plunge 36% against the euro over the next year or so, taking it to levels it has not seen in more than a decade.

The greenback's recent weakness "is the beginning of a very large move" that could hurt the droves of investors exposed to it through their holdings in U.S. stocks and bonds, Lindahl said.

Wall Street is swarming with bearish dollar forecasts, though few are as extreme as Lindahl's. The U.S. currency is near its lowest level in 27 months and is down about 11% from its 2020 peak against a basket of its peers, with Goldman Sachs, UBS and Societe Generale among the banks forecasting more losses.

Hedge fund bets against the dollar in futures markets are at their highest level in about a decade, according to data from the Commodity Futures Trading Commission, while 36% of fund managers in a recent Bank of America Global Research survey named shorting the dollar as their top currency trade for the second half of the year.

Getting the dollar right is key for investors, as its trajectory sways everything from corporate earnings to the prices of raw materials such as oil and gold.

Goldman Sachs, for instance, believes a steadily improving global economy and negative real rates in the United States are a "sustained recipe for dollar weakness."

"There's a lot of speculation these days that the dollar will crash and lose its ...

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