From Reuters over the weekend, a guide to the top 5 currency bets this coming year. Nothing of much surprise in the list.
Here are five top bets that hedge funds are pursuing for 2014:
1. Long USD/JPY
“The whole driver (this year) is going to be yen. If you’re only a USD guy and you’re … only in euro/dollar, you’re going to get a whole lot of nothing,” said Aaron Smith, managing director at currency hedge fund firm Pecora Capital, who said the yen was his heaviest weighted currency pair.
2. Short AUD/NZD or AUD/USD
Citing:
- short the Aussie in the belief it will suffer as China’s demand for commodities cools.
- One star manager to benefit is CQS founder Michael Hintze, who has cited the “very, very clear” wish of central bank governor Glenn Stevens for the Aussie to weaken.
3. Long GBP/EUR
- the UK is nevertheless seen on the tightening path, in contrast to the euro zone, where disinflation remains a concern.
According to the Newedge Trend Indicator – a model portfolio that replicates the trades computer-driven trend-following funds might make – these funds have been long the pound for 158 days.
4. Long USD/CAD
5. Long Mexican peso vs. emerging market currencies
“The Mexico peso is (our) favourite overall because of the ongoing reform process, especially on energy, and the implications this has for stronger foreign direct investment and other inflows into Mexico, as well as the impact on potential growth,” said Ian Gunner, manager at Altana Hard Currency Fund.
More at the link (above).
