Rate divergence: Fund managers reveal their currency plays

Stewart Cowley portfolio manager, Old Mutual Global Strategic Bond fund Being Cautious Everyone appears to be bullish on the dollar which is worrying. Much of this is based on the idea the Federal Reserve will raise rates this year. I do not think there is a strong case for it: there is not an established credit cycle in the US. Currency models have not been useful since the crisis hit but, on an old school interest differential basis, sterling is almost exactly where it should be against the dollar: a reason for caution. The euro is slightly undervalued. In order to move to ...