Dollar Favored, Euro Troubled According To Hedge Fund Managers

Mar 10 2010 | 11:44am ET

There has been much talk about the decline of the dollar as the world’s favorite currency, but not among hedge fund managers. The greenback remains their favored currency by a wide margin, according to a new survey.

Fifty-seven percent of those responding to the TrimTabs Investment Research/BarclayHedge Currency Survey are bullish on the dollar over the next three months. The Brazilian real was a distant second, favored by 11.5%, followed by the yen and “other” currencies, among them the Australian dollar, with 8.2%.

The Canadian dollar was picked by 6.6%. The euro was favored by just 4.9%; about three times as many think a “full breakup” of the eurozone is likely, most of them British and American fund managers. The “remarkably unpopular” British pound Sterling was picked by 3.3%.

“Hedge fund managers overwhelmingly favor the U.S. dollar in the short term,” the report said. “This confirms other sentiment surveys and is consistent with aggressive buying of U.S. dollar index futures by speculative traders.”

Most hedge fund managers—59%—believe the Greek sovereign debt crisis could spread to other countries in the European Union. Most of them disagree, however, with the 15% of their colleagues that think the euro is doomed.

“Popular opinion in Germany is strongly opposed to a bailout of the free-spending Greeks, and a weak euro is in the interest of German exporters,” Vincent Deluard of TrimTabs said. “The French and German governments are therefore most likely to let the bond market bite Greece—but act if the crisis threatens other eurozone member countries.”

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