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Woodside Holdings cuts dollar bets, citing volatile policies
[SINGAPORE] Woodside Holdings Investment Management, a Singapore-based family office, trimmed bets the US dollar will strengthen amid uncertainty as to when the Federal Reserve will start raising interest rates.
Woodside cut the percentage of its liquid assets denominated in the greenback to about 75 per cent from 80 per cent this year, said David Fergusson, who is chief investment officer at the company that was set up by his grandfather in 1959.
Traders have set back bets for when US policy makers will raise borrowing costs as officials such as Atlanta Fed President Dennis Lockhart and Fed Bank of Boston President Eric Rosengren said this month policy should stay accommodative. The Swiss National Bank unexpectedly scrapped its currency ceiling in January, while policy makers in Singapore and Japan also surprised the market by boosting stimulus in the past six months "You can't make investment decisions when the central bankers are behaving the way they are, when they are prepared to experiment in these ways and in such unorthodox and unpredictable ways," Mr Fergusson said in an interview Wednesday. The dollar's gains "have been slowed somewhat by the ridiculously dovish comments by the Fed in recent weeks." An index of the dollar slumped 1.8 per cent in April, snapping a nine-month rally that was the longest since the gauge was introduced in 2004. Hedge funds have trimmed bets on dollar gains for a third month in April, according to the latest data from the Washington-based Commodity Futures Trading Commission.
Charlie Chan, a former proprietary trader at Credit Suisse Group AG who now runs his own hedge fund, said last week he reduced trades the dollar would appreciate and added others that would profit from a decline.
The Fed starts a two-day meeting on Tuesday after reports last week showed manufacturing and new home sales fell short of economist forecasts. The central bank will probably boost rates in September, according to a Bloomberg survey published April 16, versus a June liftoff predicted a month earlier.
The dollar has weakened against all except one of its 16 major counterparts this month and strategists have trimmed forecasts on how much it will gain. The currency will appreciate about 4.6 per cent to US$1.04 per euro by year-end and 5 per cent to 125 yen, according to Bloomberg surveys.
The dollar was at US$1.0882 per euro and 119.05 yen at 8:34 am in London.
Woodside bought more gold and reduced bets the Singapore dollar and British pound would decline against the greenback, Mr Fergusson said.
The family office still expects the dollar to strengthen over the medium term and the amount of its greenback holdings is still higher than the 50 percent it had at the start of last year, he said.
Mr Fergusson was formerly head of Indonesia research at Citigroup Inc. and also ran a telecommunications investment- banking team at CLSA Ltd. His late grandfather, Ewen Fergusson, was chairman of The Straits Trading Co, a Singapore-based tin- smelting and investment holding company. A family office is a private company that manages the wealth of one or more rich families often built up over many generations.
"Have we trimmed our dollar position? Yes, very slightly," Mr Fergusson said. "Are we likely to put them back on? Yes, probably, if it looks like the dollar rally will resume."