Money managers agree one trade is really crowded, but they're loading up on it anyway

pulse

March 21, 2017 5:56 PM

Bets the US dollar would rise are still considered the "most crowded" trade according to Bank of America Merrill Lynch's survey of fund managers.

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Investors continue to hold seemingly conflicting views on the US dollar.

Bank of America Merrill Lynch's latest survey of fund managers published on Tuesday showed that bets the US dollar would rise are considered the "most crowded" trade.

One problem with a crowded trade is that investors could be exposed to heightened volatility if the bet they're making suddenly turns in the other direction.

At the same time, "long dollar" was one of the most popular positions relative to the survey's historical averages:

And, the survey also showed that money managers think the dollar is more overvalued than it's been in a decade:

The dollar rose to a 13-year high against other major currencies after the November election, supported by traders' hopes that President Donald Trump's agenda would stoke the US economy.

But the greenback's rally has faded this year, with the dollar index down nearly 4% since January 1.

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