As global central banks cut interest rates, traders are evaluating how best to capitalize on the weakening US dollar. The greenback has experienced its worst quarterly performance in nearly two years, pressured by the Fed's recent 50 basis point rate reduction. While lower yields in the US are expected to narrow the gap with other economies, the future trajectory of the dollar remains uncertain due to factors like a resilient US economy and upcoming elections.
Traders gauging how to best play a sliding U.S. dollar are eyeing the relative strength of economies around the world, as rate cuts from global central banks shake up currency markets .
Net bets on a weaker dollar have grown to $14.1 billion in futures markets, the highest level in about a year, data from the Commodity Futures Trading Commission showed. The path lower for the dollar, however, is likely to be a bumpy one. From the U.S. side, Friday’s labor market data could help shape views on how much the Fed might cut rates for the rest of the year.
Upadhyaya also added to a position in the Brazilian real. Unlike many of its peers, Brazil’s central bank hiked rates last month as it looks to tackle a challenging inflation outlook. The Brazilian real is down about 10% against the dollar this year.
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