LIVE MARKETS-Where to be long against the dollar

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WHERE TO BE LONG AGAINST THE DOLLAR

The dollar index is down about 9% this year, as the greenback heads for its weakest performance against a basket of currencies since 2017.

Jefferies economists maintain their view of structural dollar weakness, but they believe the areas to play the theme are shrinking.

"In terms of offsetting pair, we see only in a limited move higher in EUR or GBP," Jefferies economists Mohit Kumar and Modupe Adegbembo say in a note. The two currencies are up 12% and 6% against the dollar this year, respectively.

Instead, they believe that the best way to play dollar weakness is against the metals complex.

"Our view remains that gold should be the main beneficiary of any diversification play. It also provides a good hedge against our overall bullish portfolio," they note.

Gold XAU= has surged 53% in dollar terms this year, although has recently retreated from its record high as some momentum trades have unwound.

The other way to position is versus Asian currencies, Jefferies says.

"Asian countries could let their currencies appreciate vs USD, which can help to reduce trade imbalances with the U.S.," Jefferies adds.

(Samuel Indyk)

EARLIER ON LIVE MARKETS:

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($1 = 0.8575 euros)