Why it is time to ditch crowded currency trades

Ugo Lancioni, head of global currency at Neuberger Berman, takes a closer look at some of the consensus currency positions of last year, and asks if they are still compelling.

Sometimes, fighting the consensus can be dangerous and going with the flow is often the safest way to generate returns. It is well-known that trading against the major central banks can be perilous, for example. ‘Don't fight the Fed' as they say. Recently, we have learned not to fight the European Central Bank (ECB) or the Bank of Japan (BoJ) either. So whatever you do, don't fight all three at once. Last year, that meant being long the US dollar. The Federal Reserve had been readying the market for policy tightening since summer 2013. By October 2014, ‘tapering' of its quantitative e...