Betting on the peak of US interest rates, investors are selling the US dollar at the fastest pace in a year.
Betting on the Federal Reserve having completed its aggressive rate hike campaign and will conduct multiple rate cuts next year, Deutsche Bank, which manages $40 trillion in assets, announced that its asset management company will sell 1.6% of its open US dollar positions this month, marking the largest monthly outflow since November last year. The US dollar index also recorded its worst monthly performance in a year. Analysts warned that the asset sell-off by asset management companies may just be the beginning of a long-term trend of investors reducing their exposure to US dollar assets.
Betting that the Federal Reserve has completed its aggressive rate hikes and will cut rates multiple times next year, State Street Bank, which manages $40 trillion in assets, said its asset management unit sold 1.6% of its open US dollar positions this month, the largest monthly outflow since November last year. The US dollar index also posted its worst monthly performance in a year, with analysts warning that the asset management company's selling may be just the beginning of a long-term trend of investors reducing their exposure to the US dollar. State Street Bank's data shows that there have been only six cases of such rapid reduction in US dollar holdings in the past twenty years. The most recent one occurred in November last year, when the US dollar index fell by about 10% by the end of January. Foreign exchange strategist at BNY Mellon, New York Mellon Bank, said that the bank's custody clients have been "selling the US dollar at the fastest pace this year" and prefer to buy the yen, the Canadian dollar, and a range of Latin American currencies. Meanwhile, Lombard Odier Investment, a macro and multi-asset manager, said that the weakening of the US dollar has dampened bullish sentiment in US stocks, and "we will increase our holdings of emerging market stocks and commodities."