Pimco Says the Strong Dollar’s Run Is ‘Close to the End’
Slowing U.S. growth will finally put a dent in the greenback.
(Bloomberg) -- Emerging-market currencies offer some of the best value today as an eight-year run of dollar strength is “close to the end,” according to Pacific Investment Management Co.
“We like to be long a number of those,” Gene Frieda, a Pimco strategist in London, said Wednesday on Bloomberg TV.
Slowing U.S. growth will finally put a dent in the greenback, while counterparts in the developing world are about 15% undervalued, according to Frieda. Japan’s yen is a “unique” investment in that it’s a safe currency that’s actually cheap, he said.
Risky assets could get an additional boost from the Federal Reserve, which is expected to hold interest rates steady on Wednesday while opening the door to a cut. The prospect of Fed cuts will be dependent upon results of a planned meeting between President Donald Trump and China’s Xi Jinping at the G-20 summit next week, according to Frieda.
“If there’s a restart to trade talks, I think there will be a tremendous amount of relief in markets and that will probably push out rate cuts at least further into 2019,” he said. Meanwhile, “if they start cutting rates, it will likely be an extended cycle.”
--With assistance from Francine Lacqua and Tom Keene.
To contact the reporter on this story: Ben Bartenstein in New York at bbartenstei3@bloomberg.net
To contact the editors responsible for this story: Julia Leite at jleite3@bloomberg.net, Alec D.B. McCabe, Philip Sanders
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