Dollar Loses Sheen for $2.8 Trillion Fund as Rates, FX Diverge

  • State Street is bullish on sterling and the Norwegian krone
  • Rising hedging costs also dim dollar’s attractiveness: Binny

State Street Global Advisors has cut its dollar positions to neutral from long, deterred by rising hedging costs and a break in the correlation between the global currency and rates markets.

Interest rates are the base drivers for currency movements, but that link seems to have “somewhat frustratingly broken down so far this year,” said James Binny, who oversees $116 billion as global head of currency at State Street. The dollar-yen rate is a “classic example,” he said…
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