Hedge Funds Rework Positions in Emerging-Market Drop - Bloomberg

Hedge Funds Rework Positions in Emerging-Market Drop - Bloomberg:



"Traders who anticipated a year when riskier bets would pay off are overhauling their foreign-exchange positions after an emerging-markets rout led to the biggest currency-fund losses to start the year since 2004.



Hedge funds and other large speculators shuffled holdings of the dollar, yen, pound, Mexican peso and four other major currencies by a net 102,115 contracts in the week ended Jan. 28, according to Commodity Futures Trading Commission data. That’s the biggest realignment since September, with updated figures due tomorrow. Currencies from the U.K., Japan and Europe saw the biggest increase in bets on appreciation, while traders added wagers on declines for Mexico’s and Australia’s currencies.



With the global economy gathering steam, foreign-exchange traders were positioned to benefit from gains in riskier assets, even with the Federal Reserve pledging to buy fewer bonds. They failed to foresee turmoil in emerging markets from China to Argentina that followed a slowdown in U.S. jobs growth as the yen -- a favored haven -- rallied against all 31 of its major peers this year."



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