By Ben Levisohn
Feb. 12 (Bloomberg) — Futures traders increased to a record bets that the euro will decline against the dollar amid concern European Union efforts to avoid a default by Greece will undermine the region’s economic recovery.
The difference in the number of wagers by hedge funds and other large speculators on a decline in the euro compared with those on a gain, the netposition, was 57,152 on Feb. 9, the most since the euro was introduced in 1999, compared with 43,741 the prior week, figures from the Commodity Futures Trading Commission in Washington show.
“A quick fix isn’t possible in Europe,” said Brian Kim, a currency strategist at UBS AG in Stamford, Connecticut. “Sovereign debt used to be what you had to watch out for. Now, the recovery is slowing down, and that’s another thing to worry about. People are increasing their shorts on that.”
The euro declined versus the dollar after the European Union’s statistics office in Luxembourg said the region’s economy grew 0.1 percent in the fourth quarter, compared with economists’ forecasts for a 0.3 percent gain. It rose 0.4 percent in the third quarter.
EU leaders in a statement yesterday declined to set out concrete steps to aid Greece, leaving open how they would respond to a fresh wave of speculative attacks against the bonds of Greece or countries such as Spain and Portugal, which are also struggling to cut their deficits.
The euro today declined as much as 1.2 percent to $1.3532, the weakest level since May 19, and was at $1.3618 at 4:30 p.m. in New York.
Futures are agreements to buy or sell assets at a set price and date. The figures reflect holdings in currency-futures contracts at the Chicago Mercantile Exchange as of Tuesday.
Each Friday the CFTC publishes aggregate numbers for long and short positions for speculators such as hedge funds and institutional investors that buy or sell futures to protect against price moves. Analysts and investors follow changes in speculators’ positions because such transactions can reflect an expectation of a change in prices.
Last Updated: February 12, 2010 16:40 EST