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Most Crowded FX Trade Triggers Warning of Pain for Hedge Funds

(Bloomberg) Shorting the dollar, the most crowded trade in foreign exchange, is getting too popular for its own good.
So say investors and analysts from Amundi Pioneer Asset Management to Wells Fargo, who recommend clients pare wagers on near-term greenback weakness after hedge funds piled into the trade, seeking to profit from a slump that’s reached 8.6 percent this year. Money managers in a Bank of America survey last week labeled it the second-most overcrowded bet across markets, after speculators amassed the biggest net-short position on the dollar in more than four years, CFTC data show.

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