Pimco’s senior fund manager, Andrew Balls, advised to lower its weight for the US dollar and increase its weight for British government bonds.
Advising to reduce the weight of the US dollar against the G10 and emerging market currencies, Balls said, “It is not always guaranteed to take a short position in the dollar, but we will be on the side of reducing the weight in the next 2 years.”
Balls also stated that they anticipate that the US dollar will maintain its reserve currency status, emphasizing that they see value in UK bonds when compared to US or European bonds.
On the other hand, although the US dollar saw a slight decrease in net long positions, it continues to maintain its attractiveness in the eyes of speculators.
The dollar’s performance in the spot market remains solid despite expectations for a pause in the Fed’s rate hike cycle this month.
“Net USD long positions have been on the decline, but above the average for the past few months,” said Jane Foley, Senior Currency Strategist at Rabobank.
In terms of British Pounds, the mood among speculators has turned positive and net positions have remained positive for eight consecutive weeks.
This marks a significant shift in sentiment relative to the start of the year. There are growing concerns that the Bank of England (BoE) may need to continue raising interest rates in response to rising inflation data in the UK.
“Very sticky UK inflation data has triggered concerns that the BoE may have little choice but to continue raising interest rates to control price pressures,” Foley said.
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