A handful of hedge funds in Asia are among the ones that are massively accumulating the U.S. dollar’s latest dip. The DXY index, which measures the performance of the U.S. dollar shows the currency crashing to the 104.20 mark on Thursday. The development made the markets jittery as local currencies strengthened against the USD. 

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Source: MarketWatch

However, the latest data shows that currency investors purchased the U.S. dollar during the dip taking long positions. Surprisingly, even leading hedge funds in Asia accumulated the U.S. dollar to make the most out of the recent price dip.

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The U.S. dollar is now at its one-month low and shed most of the gains it generated in Q1 of this year. The USD first dipped after the jobs data was released by the Labor Department last week.  Employers in the US created fewer jobs than anticipated leading to the currency weakening. The expectation was 243,000 jobs, but the labor market created only 175,000 job openings.

The CPI data which showed inflation cooling down to 3.1% had an underlying in the retail sales that was concerning. The retail sales missed by 4/10 of a percent and traders are hoping that the Feds would cut rates again. All these undercurrents pulled the U.S. dollar to the 104 price range this week.

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U.S. Dollar Massively Accumulated By Asian Hedge Funds

Source: Bloomberg

The latest report from Bloomberg indicates that hedge funds in Asia are also buying the U.S. dollar dips. “We have seen some buying of dollar-yen this morning from a variety of accounts, around and below the 154 level but the sizes have been small,” said Antony Foster, the Head of G-10 Currency Spot Trading at Nomura International.

The USD accumulation by hedge funds is long and not for the short term, according to the report. Therefore, the U.S. dollar has more chances of bouncing back to the 106 or 107 price range as the buying pressure has cemented its resistance levels.


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