Hedge funds cut NFLX, keep big bets on MSFT, AMZN, add NVDA
Investing.com - UBS expects the dollar to continue weakening this year, setting 2025 year-end targets for EUR/USD at 1.23 and USD/JPY at 130.
The Swiss bank cites four structural reasons for dollar depreciation beyond the anticipated slowdown in U.S. GDP growth and Federal Reserve rate cuts.
First, U.S. net foreign debt has expanded dramatically to 88% of GDP from just 9% in 2005. Second, UBS considers the dollar "over-owned" in global portfolios, noting that while the U.S. accounts for only 16% of global trade, the dollar represents 58% of global foreign exchange reserves.
The bank’s FX team estimates approximately $13.4 trillion of unhedged dollar positions from G10 countries, suggesting that even a 5% reduction would trigger a $670 billion dollar selloff.
Additional factors supporting UBS’s bearish dollar outlook include potential global tariff disruptions and the dollar’s current overvaluation from a purchasing power parity (PPP) perspective.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.