Hedge Funds Go All In on Dollar, First Time in Over a Year
- Fed comments, latest data back hedge funds’ optimism
- Bloomberg dollar gauge had fallen in last five weeks
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Hedge funds are betting the greenback’s longest stretch of weekly declines in almost three years is about to reverse after investors ramped up pricing for Federal Reserve interest-rate cuts to extreme levels.
Leveraged funds were net short all major currencies against the dollar last week, the first time that’s occurred since January 2022, according to the latest Commodity Futures Trading Commission data. While a gauge of overall investor positioning remains bearish on the greenback, the broad degree of optimism among hedge funds may signal receding concern over the impact of the banking crisis on the Fed’s willingness to battle inflation.