Woodside trims US$ bets amid uncertainty over Fed policy

Singapore

WOODSIDE Holdings Investment Management, a Singapore-based fund management company, has trimmed bets that 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 that 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 on 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.

Woodside bought more gold and reduced bets the Singapore dollar and British pound would decline against the greenback, Mr Fergusson said.

It still expects the dollar to strengthen over the medium term and the amount of its greenback holdings is still higher than the 50 per cent it had at the start of last year, he said.

"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." BLOOMBERG