The World's Largest Currency Hedge Fund--FX Concepts--is Now Long the Dollar


It seems we are not the only ones expecting a prolonged rally for the friendless US dollar. Today, it was announced that FX Concepts, run by John Taylor, it cutting its short dollar positions and preparing for continued strength in the dollar.

We noted last week of the major reversal in EUR/USD accompanied by unusually large volume (The Much Maligned Dollar is About to Turn Higher).

This move by FX Concepts comes on the back of larges losses for the hedge fund in May--down around 5%--because of their short dollar positions.

From Dow Jones:

Scott Ainsbury, a senior portfolio manager at the fund, said any potential lasting dollar rally seemed unlikely before last week. But now, he said the firm is rethinking that position and adjusting the fund accordingly.

"We've cut our dollar shorts position substantially," Ainsbury said, adding "there are maybe some indications that [this rally is] going to be a little bit longer lasting."

He noted many scenarios under which the U.S. currency could rally, perhaps well into this summer.

Last week's sharp selloff in commodities could point to a growing investor concern that global growth may be slowing, said Ainsbury. That could potentially lift the dollar versus growth-based currencies. A recent round of soft U.S. data also may ironically help the U.S. currency as well: less U.S. growth, less global growth and less for growth-centric currencies.

Ainsbury also said FX Concepts recently decided to short the euro, betting against the single currency's prospects, versus the yen specifically. The negative euro sentiment is broader than just concerns over a possible Greece debt restructuring, he said.

In addition to shorting the euro, FX Concepts is positioning itself for a stronger yen.

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