2023-07-10 11:22:00
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Investing.com – Hedge funds have changed their direction towards fully bearish bets on the US dollar for the first time since last March, on the impact of expectations that the Federal Reserve is close to ending the cycle of raising interest rates, which will support the rise in the coming period.
Debt-funded investors turned net short of the greenback with about 20,091 contracts in the week to July 7th. They were long betting USD long with about 5,196 contracts in the previous week. According to data from the CFTC compiled by Bloomberg.
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Meanwhile, the Bloomberg measure of the dollar is down 1.6% this year on signs the Fed is nearing the end of its tightening cycle, as the rest of the world engages in raising interest rates to combat inflation.
Employment data on Friday showed that US employers added fewer jobs in June than economists expected, boosting the confidence of dollar bears who are betting that the central bank will start easing policy sooner rather than later.
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The next big danger
“With the US non-farm payrolls data weak, we view the US CPI report as the next big risk to the markets,” Chris Weston, head of research at Pepperstone Group Ltd, wrote in a note.
He added, “Before that, we detected signs of dollar sellers taking the lead in the market, while the American pair is close to reaching again the highest price it reached on June 22 at 1.1012 euros per dollar, while the price is close to losing 300 basis points compared to the highest level it reached.” Recently”.
“There is a belief that the Fed can’t raise rates much more, especially when you compare that with Europe, and that is reflected in the amount of long bets on the dollar,” said Vishnu Varathan, head of economics and strategy at Mizuho Bank Ltd. in Singapore.
He added, “Although the markets acknowledge that the Fed may raise interest rates a bit more, the belief that the dollar has peaked is very widespread, and hedge funds are betting on further decline in the US dollar from now on.”
And it rises by 0.11% to 102.070 points during these moments of trading today, Monday.
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