Hedge Funds Trim Bullish Dollar Wagers on Brink of Fed Liftoff

Hedge funds are less bullish on the dollar even as the final countdown to next week’s likely Federal Reserve interest-rate increase begins.

Large speculators’ net futures wagers that the dollar will gain against a basket of eight currencies fell to 379,040 contracts in the week through Dec. 8, from 417,129 the week before, according to Commodity Futures Trading Commission data.

Their optimism toward the greenback has dimmed for two straight weeks after reaching the most bullish stance since August, the data show. Tumbling oil prices are containing inflation expectations and backing Fed officials’ signals that they’ll stick to a gradual pace of rate increases after liftoff.

Bloomberg’s dollar index is up about 0.2 percent this week after a 1.1 percent decline the previous week that was its steepest since October.

Traders see a 72 percent probability the Fed will increase its benchmark from near zero by its meeting on Dec. 15-16, according to futures data compiled by Bloomberg. The calculation is based on the assumption the effective federal funds rate will average 0.375 percent after liftoff, compared with the current range of zero to 0.25 percent.

Before it's here, it's on the Bloomberg Terminal. LEARN MORE