Hedge funds catapulted bearish wagers on the euro to a near one-year high as markets bet the European Central Bank is done raising interest rates.
Leveraged investors ramped up net short positions on the shared currency to 23,306 contracts during the week ended Sept. 19, the most since Oct. 11, according to data from the Commodity Futures Trading Commission. Longer-term asset managers also pared back bullish bets on the currency for a sixth week.
“Europe is struggling with anemic growth and sticky inflation, while the US is enjoying above trend growth that is backed by a strong consumer,” said Ashvin Murthy, chief investment officer at hedge fund AVM Capital Pte. in Singapore. “This period of US exceptionalism is supporting the US dollar and we expect the euro to remain under pressure for the next six months.”
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