Investors should buy the dollar versus the franc as bullish positions on the Swiss currency climb to their highest level in more 17 months, indicating it may have gained too much, too fast, Lloyds Banking Group Plc recommended.
The difference in the number of wagers by hedge funds and other large speculators on an advance in the franc compared with those on a drop -- so-called net longs -- was 11,631 on Jan. 1, the highest level since the week ended Aug. 5, according to data from the Washington-based Commodity Futures Trading Commission. Traders had a net-short position in francs as recently as November, the data showed.
The data suggest “franc positions are already long, suggesting scope for unwinding,” London-based strategists at the firm including Adrian Schmidt wrote today in a note to clients. Schmidt wasn’t available to comment on the report.
The euro probably will also strengthen against the Swiss currency, the analysts wrote.
The dollar fell 0.1 percent to 91.30 centimes today in New York after gaining as much as 0.4 percent earlier. The euro advanced 0.4 percent to 1.2181 and touched 1.2201, the strongest level since December 2011.
The franc rose 2.5 percent versus the dollar in 2012 and appreciated 0.7 percent against Europe’s shared currency.