Trading in anticipation of a weaker dollar has become increasingly popular among hedge funds and others after the U.S. Federal Reserve roiled markets by signaling an end to monetary tightening.
According to Commodity Futures Trading Commission (CFTC) data compiled by Bloomberg, non-commercial traders – speculative market participants such as hedge funds and asset managers – shorted the dollar in the week ending the 19th. Expanded the position.
More than 39,000 coins are now tied to expectations of a weaker dollar, and are more than 10,000 more than the week before, ahead of the last Federal Open Market Committee (FOMC) meeting of the year.
The dollar suffered a sharp decline after the FOMC released its latest economic outlook, increasing expectations for easing next year. The Bloomberg Dollar Spot Index fell to its lowest level since July and is down more than 2% year-to-date, on track for its worst annual decline since 2020.
However, although the number of positions betting on a weaker dollar increased, the total amount decreased slightly to $5.5 billion (approximately 782.5 billion yen). November US personal consumption expenditure (PCE) statistics released on the 22nd showed that the growth in the core price index excluding food and energy was lower than market expectations, the dollar’s depreciation accelerated, and the Federal Reserve announced next year’s forecast. It was confirmed that the central bank will focus on lowering interest rates.
The Swiss franc rose to its highest value against the dollar since 2015, while the euro and Norwegian krone hit their highest since August.
According to the one-year risk reversal index, demand for options that profit from a strong dollar has fallen to its lowest level since May compared to options that profit from a weak dollar, and the dollar is expected to weaken further over the next year. It is expected to proceed.
Original title:Shorting the Dollar Is Gaining Favor After Fed’s Great Pivot (excerpt)
2023-12-25 02:52:21
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