{"id":1658872,"date":"2022-09-26T16:52:23","date_gmt":"2022-09-26T20:52:23","guid":{"rendered":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/?p=1658872"},"modified":"2022-09-26T16:52:57","modified_gmt":"2022-09-26T20:52:57","slug":"crowd-of-dollar-bulls-raises-risk-of-violent-pullback","status":"publish","type":"post","link":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/crowd-of-dollar-bulls-raises-risk-of-violent-pullback\/","title":{"rendered":"Crowd of dollar bulls raises risk of violent pullback"},"content":{"rendered":"<aside class=\"mashsb-container mashsb-main mashsb-stretched\"><div class=\"mashsb-box\"><div class=\"mashsb-count mash-medium\" style=\"&quot;\"><div class=\"counts mashsbcount\">18<\/div><span class=\"mashsb-sharetext\">SHARES<\/span><\/div><div class=\"mashsb-buttons\"><a class=\"mashicon-facebook mash-medium mash-nomargin mashsb-noshadow\" href=\"https:\/\/www.facebook.com\/sharer.php?u=https%3A%2F%2Fwww.conservativenewsdaily.net%2Fbreaking-news%2Fcrowd-of-dollar-bulls-raises-risk-of-violent-pullback%2F\" target=\"_top\" rel=\"nofollow\"><span class=\"icon\"><\/span><span class=\"text\">Facebook<\/span><\/a><a class=\"mashicon-twitter mash-medium mash-nomargin mashsb-noshadow\" href=\"https:\/\/twitter.com\/intent\/tweet?text=&amp;url=https:\/\/www.conservativenewsdaily.net\/breaking-news\/?p=1658872&amp;via=ConservNewsDly\" target=\"_top\" rel=\"nofollow\"><span class=\"icon\"><\/span><span class=\"text\">Twitter<\/span><\/a><a class=\"mashicon-subscribe mash-medium mash-nomargin mashsb-noshadow\" href=\"#\" target=\"_top\" rel=\"nofollow\"><span class=\"icon\"><\/span><span class=\"text\">Subscribe<\/span><\/a><div class=\"onoffswitch2 mash-medium mashsb-noshadow\" style=\"display:none\"><\/div><\/div>\n            <\/div>\n                <div style=\"clear:both\"><\/div><\/aside>\n            <!-- Share buttons by mashshare.net - Version: 4.0.47--><p>By Saqib Iqbal Ahmed<\/p>\n<p>NEW YORK (Reuters) -Some investors are growing concerned the dollar\u2019s meteoric rise is setting the stage for a rapid reversal, which would bruise those who have sought refuge in the U.S. currency in recent months. <\/p>\n<div id=\"div-gpt-ad-1663871513696-art-1\">\n<\/div>\n<p>Soaring U.S. interest rates, a comparatively strong American economy and demand for a haven from wild gyrations in asset prices have lured investors to the dollar, driving it up about 22% against a basket of currencies in the past year.<\/p>\n<p>Some investors worry the dollar trade has become excessively crowded, raising the risk of a sharp unwind if the case for owning the currency changes and investors try to exit their positions all at once.<\/p>\n<p>\u201cPositioning is crowded,\u201d said Calvin Tse, head of global macro strategy, Americas, at BNP Paribas. \u201cIf we get a catalyst, the dollar can turn, and turn very aggressively,\u201d he said.<\/p>\n<p>International Monetary Market speculators held a net long U.S. dollar position of $10.23 billion for the week ended Sept. 20. That is lower than a recent high of nearly $20 billion in July but marks the third-longest streak since 1999 in traders holding bullish positions on the greenback, with 62 straight weeks of long positioning.<\/p>\n<p>Barring a brief period of peak pandemic-related uncertainty, broad net options positioning data going back to 2014 shows U.S. dollar long positions are the most stretched ever, according to Morgan Stanley.<\/p>\n<p>Some 56% of participants in BofA\u2019s global fund manager survey in September named being long the dollar as the most \u201ccrowded trade,\u201d the third straight month the greenback has held that position in the survey.<\/p>\n<p>Investors may have already had a taste of what a reversal could look like when the dollar index retreated nearly 3% over the course of two weeks, starting in mid-July, as some investors bet U.S. inflation might be set to moderate enough to allow the Fed room to pivot away from its path of aggressive interest rate hikes.<\/p>\n<p>While a hotter-than-expected U.S. inflation report in August dashed those hopes and sent the dollar higher, the dangers stemming from the crowded dollar trade have only grown, investors said.<\/p>\n<p>\u201cUndoubtedly, when you have a crowded trade, where you have  investors all seeking the same thing, when perceptions do change, the reaction is a violent one,\u201d said Eric Leve, chief investment officer at wealth and investment management firm Bailard.<\/p>\n<p>\u201cWe could easily see a 10%-15% move the other way in the  dollar vs euro or yen,\u201d he said.<\/p>\n<p>In 2015 and 2009, the last two instances when the dollar index rose more than 20% during a one-year period, the index subsequently logged a two-month drop of 6.7% and 7.7%, respectively, once the greenback peaked.<\/p>\n<p>REVERSAL CATALYST<\/p>\n<p>While crowded positioning can aggravate any potential reversal for the dollar, it would take a big fundamental change to cause that reversal, investors said.<\/p>\n<p>Falling U.S. interest rate volatility, normalizing European energy prices and China abandoning its zero-COVID policy are three prerequisites for the dollar to enter into a structural bear market, BNP\u2019s Tse said.<\/p>\n<p>\u201cWhen those three are all checked off, it provides us more of a runway to see the dollar enter a bear market, but I don\u2019t see these happening any time soon,\u201d he said.<\/p>\n<p>While U.S. interest rates are above those in many other economies, almost every major central bank, including the European Central Bank and the Bank of England, has hiked rates as they step up their fight against high inflation, helping boost the allure of their battered currencies.<\/p>\n<p>Any signs that U.S. inflation could be easing might help revive expectations for a dovish pivot by the Fed, robbing the greenback of a crucial driving force.<\/p>\n<p>A serious blow to the U.S. economic outlook could also hurt the dollar, said Jack McIntyre, a portfolio manager at Brandywine Global.<\/p>\n<p>The Fed\u2019s aggressive policy tightening has boosted worries that the U.S. economy could be headed for a recession next year. <\/p>\n<p>The world\u2019s three largest economies \u2013 the United States, China, and the euro zone \u2013 have been slowing sharply, and even a \u201cmoderate hit to the global economy over the next year could tip it into recession,\u201d the World Bank said in a recent study.<\/p>\n<p>\u201cI think what weakens the dollar is increasing likelihood that the U.S. goes into a recession, and that is not discounted in the dollar,\u201d McIntyre said.<\/p>\n<p>But with the dollar scaling new multi-decade highs, positioning for a pullback can be painful. \u201cWe have been fighting it a little bit, but it\u2019s tough,\u201d McIntyre said.<\/p>\n<p> (Reporting by Saqib Iqbal Ahmed; editing by Ira Iosebashvili, Megan Davies and Paul Simao)<\/p>\n<p><a href=\"https:\/\/www.oann.com\/business\/analysis-crowd-of-dollar-bulls\/attachment\/file-photo-a-teller-counts-u-s-dollars-at-a-money\/\"><img decoding=\"async\" src=\"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-content\/uploads\/2022\/09\/tagreuters.com2022binary_LYNXMPEI8P0Y4-BASEIMAGE.jpg\" alt=\"tagreuters.com2022binary_LYNXMPEI8P0Y4-BASEIMAGE\" \/><\/a><\/p>\n","protected":false},"excerpt":{"rendered":"<p>By Saqib Iqbal Ahmed NEW YORK (Reuters) -Some investors are growing concerned the dollar\u2019s meteoric rise is setting the stage for a rapid reversal, which would bruise those who have<\/p>\n","protected":false},"author":66,"featured_media":2315279,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_mo_disable_npp":"","fifu_image_url":"","fifu_image_alt":"","footnotes":""},"categories":[],"tags":[],"class_list":["post-1658872","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry"],"_links":{"self":[{"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/posts\/1658872","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/users\/66"}],"replies":[{"embeddable":true,"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/comments?post=1658872"}],"version-history":[{"count":0,"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/posts\/1658872\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/media\/2315279"}],"wp:attachment":[{"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/media?parent=1658872"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/categories?post=1658872"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/tags?post=1658872"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}