Shorting the dollar Is gaining favour after Fed’s great pivot
Non-commercial traders — a group that includes hedge funds, asset managers and other speculative market players — boosted their bearish bets on the greenback in the week ended Tuesday, according to CFTC data compiled by Bloomberg. More than 39,000 contracts are now tied to expectations the US currency will fall, up more than 10,000 from a week ago when the Fed was preparing to meet, the data show.
The currency has suffered a pronounced slump in the wake of that confab, when the Fed released updated economic projections forecasting additional monetary easing next year.
That sent the Bloomberg Dollar Spot Index tumbling to the lowest since July and down more than 2% year to date, on track for the worst annual performance since 2020. Indeed, while there are now more contracts betting on dollar weakness, the dollar value of those contracts has actually slipped to $5.5 billion, slightly lower than last week.
The dollar extended its drop on Friday after the Fed’s preferred gauge of underlying inflation showed muted price gains, affirming the central bank’s pivot toward interest-rate cuts next year.
The Swiss franc rose to the strongest level against the US currency since 2015, while the euro and Norwegian krone rose to their highest levels since August.
