Nader Naeimi added to his bullish wagers on the dollar against the yen this month, predicting a 10 percent gain to 125 as the Bank of Japan maintains monetary stimulus. He’s less optimistic the greenback will strengthen against other currencies.
While the Federal Reserve is set to raise interest rates twice this year, the “positive dollar impact is unlikely to be as prominent as widely believed,” said Naeimi, who heads a dynamic investment fund in Sydney at AMP Capital Investors Ltd., which oversees $120 billion. That’s because the tightening will coincide with a likely reduction in the European Central Bank’s asset-purchase program and the end of policy easing by some emerging-market nations, he said in an interview.
Betting on the divergence between monetary policy at major central banks, the most popular trade in the $5.1 trillion-a-day global foreign-exchange market, is fading as interest-rate differentials become less pronounced, he said. Bloomberg’s dollar gauge has fallen about 2 percent this year, after climbing in each of the past four years.
The dollar jumped after President Donald Trump’s election victory fueled bets his reflationary policies would spur the Fed to accelerate rate increases. The currency has since wiped off about half those gains as he accused some of the nation’s major trading partners of keeping their currencies too weak. The greenback fell Thursday even as traders boosted the odds for a March rate increase following better-than-expected inflation data.
AMP Capital’s Naeimi said he bought dollars when the currency weakened against the yen earlier this month. The U.S. currency fell to 111.60 on Feb. 7, the lowest since November, and was at 113.88 as of 11:50 a.m. in Tokyo on Thursday.
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