How Hedge Funds View the Fate of King Dollar
Hedge Funds Contemplate the Future of the Dollar
After benefiting from a U.S. dollar surge to 10-month highs during a summer bond rout, hedge funds are now deliberating the future of the greenback.
AQR Capital Management’s Perspective
Jonathan Fader, managing director at AQR Capital Management, believes that the end of U.S. rate hikes does not necessarily signal weakness for the dollar. He remains optimistic about the currency, citing stronger growth trends in the U.S. compared to other major economies. AQR’s key trade involves going long on the dollar and short on the Swiss franc.
Florin Court Capital’s Outlook
Doug Greenig, chief investment and executive officer at Florin Court Capital, predicts a gradual decline for the dollar as geopolitical tensions disperse power across the world. He anticipates a sharp slowdown in the U.S. economy and expects the dollar to weaken against certain emerging market currencies. Florin Court’s key trade involves going long on Latin American emerging market currencies and short on the dollar.
NWI Management LP’s Currency Bets
Tara Hariharan, managing director of global macro research at NWI Management LP, emphasizes the difficulty in predicting a peak for the greenback due to the resilience of the U.S. economy. The hedge fund is structuring its currency bets to mitigate the impact of dollar fluctuations and is shorting offshore Chinese Yuan against a trade-weighted CFETS basket of currencies.
Garde Asset’s Favoritism towards the Mexican Peso
Carlos Calabresi, CEO of Garde Asset, favors Mexico’s currency due to its historic high interest rates and favorable balance of payments. He believes that the country will attract significant foreign investment as manufacturing capacity is shifted closer to the U.S. market. Garde’s key trade involves going long on the Mexican peso.
CIBC Asset Management’s Confidence in the Brazilian Real
Michael Sager, head of multi-asset and currency management at CIBC Asset Management, sees potential for the Brazilian real to strengthen in the short term due to a double-digit benchmark interest rate that attracts foreign capital. He points to Brazil’s strong exports, low debt levels, and controlled inflation as indicators of a robust fundamental country and currency. CIBC’s key trade involves going long on the Brazilian real.
Each hedge fund presents a unique perspective on the fate of the U.S. dollar, reflecting diverse strategies and outlooks in the current economic landscape.
