As was the case more than two years ago, investors have returned to adding short positions in the euro , which this year has reached parity with the dollar for the first time in two decades. While in 2020 they did so as a result of the effects of the pandemic, this time the motivation comes from the geopolitical tension between some of the world’s main powers and the economic uncertainty that flies over Europe, according to the Bank of New York Mellon in your latest report.
In said document, the entity emphasizes that investors are facing the current situation in a “correct” way , while in 2020 those who held short positions in this currency ended up getting burned during the global economic recovery.
But what has changed? According to the model developed by the Bank of New York Mellon, investors who are bearish towards the euro are now doing so against all currencies, including the British pound, the dollar and the Swiss franc . This is due, in part, to the fact that many consider the euro to fall again – this week it has fallen by more than 2%, although it remains just above the dollar – and, on the other hand, to the strength of the US currency. .
Likewise, the results of the banking entity published in its report support the idea that long operations in dollars outweigh bets against the euro , according to Bloomberg . As for which are the most profitable short positions, Bank of New York Mellon highlights the Thai baht and the Chinese renminbi, as well as the South African rand.
The euro, again close to parity
The markets are waiting to know the GDP growth figures in Germany or the US, the oil inventories and the manufacturing PMIs of several countries, including France, Japan, Germany or the United Kingdom, since their publication will determine the evolution of the cross between the euro and the dollar .
While the euro has returned dangerously close to parity – this Friday it reached 1.0052 dollars per euro – the US dollar has been gaining attractiveness for investors. The greenback closed the week at less than 1% of its historical maximums and has registered an advance of close to 2.5% from the minimums it marked this same month of August.
For its part, it seems that the euro will remain stagnant due “to the growing risks of stagflation , which have caused bond yields to shoot up even more,” says the firm specializing in currency trading operations Monex.