Asset managers sold the euro against the dollar last week at the fastest pace since November, according to UBS AG client flow data for Group-of-10 nations currencies.
The heightened pace came as speculation increased that Greece would leave the currency union, said Geoffrey Yu, a foreign-exchange strategist at UBS. Investors were taking positions before the June 17 Greek election, which was called after political leaders failed to form a government following an inconclusive May 6 election.
“It’s long positions being cut,” London-based Yu said in a telephone interview. “More and more investors believe that the Greek exit is a rising probability, but we’re nowhere near certainty.” A long position is a bet that the price of an asset will increase.
The net flow of euros versus dollars in overall UBS client orders last week was negative 7.6 on a scale of 10 to negative 10, UBS analysts wrote in a note today.
The euro has lost 3.5 percent this month versus the dollar, falling against nine of its 16 most-traded counterparts tracked by Bloomberg. It traded little changed at $1.2780 at 1:58 p.m. in New York.
UBS said its private clients also sold the shared currency against the dollar, while corporate and hedge fund clients’ flows were “broadly flat.”
Euro sales against the Swiss franc were the third-largest on record on a net basis, Yu said. Investors also sold the Swedish krona, the Norwegian krone and the New Zealand dollar against the greenback. Orders to purchase Australia’s dollar were up last week.
UBS is the world’s fourth-biggest currency trader according to Euromoney Institutional Investor Plc.