Dollar upbeat bets against yuan could double down on long bets against emerging currencies

Dollar upbeat bets against yuan could double down on long bets against emerging currencies

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You can see other videos from our team by tapping here. The jitters around a Chinese downturn has spurred investors to dial back on risk, according to strategists who reckon long greenback bets against the yuan and other emerging currencies could double down on long bets against the yuan and other emerging currencies. After a recent weakness, the dollar bulls gained Monday after China's central bank unexpectedly lowered policy, triggering a rush back to the world's reserve currency. Stephen Miller, an investment consultant at GSFM, said the dollar is the place to be as the fallout continues. There s good reason to believe that we will see more flows into the dollar and US assets as China's woes deepen. The Bloomberg Dollar Spot Index went up for the second straight day on Monday as investors sold everything from the Chinese yuan to the Australian dollar for the haven greenback. The US currency has been up 3% against every Group-of- 10 peer this year, despite the fact that the gauge is down more than 3% from an all-time high in July.

China s offshore yuan fell by as much as 0.6% after a slew of disappointing economic data. Its decline dragged all Asian peers lower, with the Thai baht and Indonesian rupiah among the biggest losers. If China's slowdown risks materializes, we expect it to lead to a softening of Asian currencies such as the won and rupiah, said Chang Wei Liang, strategist at DBS Bank Ltd. Asian economies are reliant on Chinese demand at risk of facing slower export growth. King Dollar Upends the Global Economy With No End In Sight To be sure, not everyone is betting on a stronger dollar. Hedge funds turned bearish on the US currency for the first time in a year, in a wager that its best days may be over. Mizuho Bank Ltd. suggested expectations that the Federal Reserve's policy tightening cycle may end soon, which is a reason for investors to be pessimistic. Others warned that calls for a peak in dollar strength may come back to bite. The single bright spot in China's economy is exports but this will come under pressure as global growth slows, said Alvin Tan, strategist at RBC Capital Markets in Singapore. You can't write off dollar strength in the midst of a global growth slowdown.