How are energy investors positioned?
Investing.com - The U.S. dollar has been hit hard of late, and as a result Citigroup (NYSE:C) has adjusted its target in the EUR/USD pair to adjust for the sudden movement, which could reach unprecedented levels.
At 08:15 ET (12:15 GMT), EUR/USD fell 0.1% to $1.1410, but this still represented a move higher of well over 5% this month, and 10% of the course of this year.
“In our portfolio we stay long EUR/USD spot, moving the target from 1.15 to 1.20,” Citi analysts said, in a note dated April 23. “Given the pace of the EURUSD move, we add a 3m 1.1850 digi with a 1.23 KO as an overlay trade.”
The bank has outlined the risks of U.S. capital flight, and since then has seen evidence of repatriation. Additionally, Europe-based investors have been seen rolling two-month losses on unhedged U.S. assets at historic levels, suggesting incentives for adjustments in hedge ratios or allocations.
At this level, the four-month spot rate of change in EUR/USD would be +19% - this has never happened before, Citi added.