Nader Naeimi, who made the right bet buying the dollar against the yen before the US election, is now selling the greenback against the currencies of Australia, Brazil, Russia and Turkey.
"It seems like long dollars [betting on a rising US dollar] is becoming a no-brainer," said Naeimi, who has two decades of investment experience and heads a dynamic investment fund at AMP Capital Investors.
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"In my mind, when it's obvious, then it's obviously wrong."
Hedge funds and other large speculators trimmed their net bullish dollar positions last week, after boosting their bets to the highest level since January, according to Commodity Futures Trading Commission data.
The US dollar has surged almost 8 per cent this quarter, its best performance since September 2008, as investors bet President-elect Donald Trump's promises of tax cuts and infrastructure spending will boost economic growth and inflation.
![](http://web.archive.org./web/20161229160146im_/http://www.smh.com.au/cqstatic/12z7v7/dollar29.png)
But the rally is fizzling out and any further strength will be limited, Naeimi said.
While the market is pricing in renewed expectations that the US Federal Reserve would diverge from other major central banks by hiking interest rates aggressively, it raised rates only once this year compared with its own earlier forecast of four increases, he said.
!['In my mind, when it's obvious, then it's obviously wrong,' says AMP Capital portfolio manager Nader Naeimi.](/web/20161229160146im_/http://www.smh.com.au/content/dam/images/g/t/j/3/q/h/image.related.articleLeadwide.620x349.gtj44f.png/1482973657920.jpg)
Futures traders see only two quarter-point moves in 2017 even thought the Fed is calling for three hikes.
Naiemi has been buying the Russian rouble, Brazilian real and Turkish lira against the US dollar this month, favouring their high real yields, recovering economies and "very cheap" valuation, he said.
While the rouble and real have been among the top performing emerging-market currencies since end-November, the lira had tumbled to a record low.
Russia's 10-year sovereign bonds yielded 8.50 per cent on Monday, while the benchmark debt of similar maturity debt in Brazil yielded 11.445 per cent and 11 per cent in Turkey.
Looking at the Australian dollar, Naemi said he will buy the greenback should it move toward US85¢, while becoming a seller as it strengthens past US72¢. Swaps signal Australia's record-low benchmark rate of 1.5 per cent may have hit rock-bottom in an RBA easing cycle that began late 2011.
The one dollar bet he's kept is against the yen, as he expects the greenback to surpass its 13-year high of ¥125.86 reached in June 2015. That's more bullish than analysts' median forecast of ¥115 for the end of 2017.
Naeimi put on the wager before the US election and the dollar has surged almost 12 per cent against the yen since the momentous vote on November 8. The Bank of Japan kept its yield-curve and asset-purchase programs unchanged this month and pledged to keep expanding the monetary base until inflation is above 2 per cent.
"The yen remains the vehicle of choice for dollar bulls since the US election, so it's hard to call a high just yet," said Sean Callow, senior strategist at Westpac Banking.
Bloomberg
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