(Bloomberg) — Speculative traders turned bearish on the dollar for the first time since February as the Federal Reserve looks set to kick off its easing cycle in September.
Most Read from Bloomberg
Hedge funds, asset managers and other players in the futures market are, on net, positioning for declines in the US currency, according to the latest Commodity Futures Trading Commission data, which covers the week ending Aug. 27. Traders have wagered some $9.8 billion tied to more losses for the dollar, the most since January.
The shift in positioning comes amid a decline in a key gauge of the greenback, which has slumped 1.6% in August — the biggest monthly drop this year. Traders have been pressuring the dollar and US bond yields lower in anticipation that US policymakers will cut interest rates by at least a quarter-point in September.
Speculative traders last held a net short position in the dollar in February, back when traders were prematurely pricing in roughly a half-dozen rate cuts in 2024.
This time, though, Fed officials have clearly signaled the intention to start easing for the first time since 2020. Swaps traders are now pricing in a full percentage point of interest-rate reductions from the Fed this year.
Hedge funds turned bullish on the euro for the first time since early June on speculation the European Central Bank will cut interest rates by less than the Federal Reserve. They were negative on the currency for a year apart from one week in June, holding now 17,320 net long contracts.
Most Read from Bloomberg Businessweek
©2024 Bloomberg L.P.
From: Yahoo.com
Financial News
