© Reuters. FILE PHOTO:An employee shows fifty-euro notes in a bank in Sarajevo
By Maiya Keidan and Saikat Chatterjee
LONDON (Reuters) — Hedge funds are looking past the euro to fall this week and the rest of the bullish, encouraged by an improved economy and political stability.
The community currency has the outstanding trading in foreign exchange markets this year, climbing more than 12 per cent against the US dollar in the year 2017. Long positions in the euro are now showing the largest in five years, the positioning of the data.
Investors, start your bets on the expectations that the European Central Bank unwinding its multi-year stimulus programs in the coming months.
The prospects for a closer political union might be grayed out after the support for the far-right, swayed in the German elections last week. But hedge Fund managers believe that the euro, the economic prospects of the country remain relatively better than, say, the US dollar.
«Our view on the euro is that it comes to you, and it is primarily due to the fact that (ECB President) Mr Draghi is also way behind that of the American Central Bank,» said Alex Roepers, the chief executive at $1.3 billion Atlantic Investment Management.
«He will have to raise interest rates, and the moment he gives up to zero, the interest rates, the euro rally, and I think it will go to $1.30.»
The Euro fell by almost 3 percent after peaking at a 2 1/2-year high near $1.21 earlier this month. The most important reason for the loss of the » dollar rebound this week, after the trump card-the administration released its tax plans, and the Federal Reserve officials make some radical comments on US interest rates.
Euro bulls are not shy away.
«Europe is in an early stage of economic recovery, and has a large current account surplus,» said Borut Miklavcic CIO and managing partner at Linden grove capital, is «very optimistic» about the euro.
With the euro zone, the economy is now growing for 17 straight, the ECB is expected to switch off their stimulus efforts next year, even if inflation is likely to remain below the bank close to the 2 percent target for the coming years.
Data on Friday showed inflation in the 19-member currency bloc held steady at 1.5 percent in September.
«Europe reminds me very much of Japan with a declining population and a huge amount of savings,» said Russell Clark, a partner at US $ 1.2 billion Horseman Capital Management, expects the euro to remain strong.