The dollar will surprise investors with a recovery from near an eight-month low against the euro and a 15-year low versus the yen, said Jens Nordvig, a managing director of currency research at Nomura Holdings Inc.
The greenback has fallen against all its major counterparts since Sept. 21, when the Federal Reserve said in a statement following its policy meeting that it’s prepared to increase purchases of government debt to support the economic recovery. The dollar fell the most in the third quarter against a basket of currencies including the euro, yen and pound since 2002.
“The next couple weeks you want to be long dollar going into the Federal Open Market Committee,” Nordvig said in an interview today on Bloomberg’s "Surveillance Midday’’ with Tom Keene. “I think the dollar is going to surprise you.” A long is a bet a currency will rise.
The FOMC is scheduled to decide on monetary policy Nov. 2-3. Futures traders trimmed bets the dollar will fall against the yen, Swiss franc and the Australian dollar, figures from the Washington-based Commodity Futures Trading Commission showed Oct. 22.
“We recommend you buy it against the Australian dollar,” Nordvig said.
The Aussie traded within a cent of parity with its U.S. counterpart after reaching that level on Oct. 15 for first time since it was freely floated in 1983. Bets rose to 52 percent that the Reserve Bank of Australia will increase its target rate when it meets Nov. 2, according to an index compiled by Credit Suisse Group AG. The probability was as low as 31 percent on Oct. 14.
“I think you want to play it against major currencies, not emerging markets,” Nordvig said. “It’s more about what the FOMC is going to do next week."