As the Fed cuts interest rates, Bank of America customers remain steadfast in shorting the US dollar
According to a survey by Bank of America, as the market prepares for a Fed rate cut, the proportion of investors who believe the US dollar will weaken has nearly doubled in the past month. In the bank's monthly sentiment survey, about 23% of respondents said their most confident trade was shorting the US dollar, the highest proportion this year, up from 8% in July. The US dollar has outperformed most G10 currencies so far this year. However, in the past month, as data suggests that US economic growth may be losing momentum, traders are betting heavily on a significant Fed rate cut, causing the dollar's rally to fade. Although the volatility has since decreased, forward trades still reflect expectations of a 100 basis point Fed rate cut, up from about 65 basis points a week ago. Bank of America interest rate strategist Ralf Preusser said, "Investors are no longer concerned about the significant upside risk of the dollar due to inflation stickiness." "This should lead to a correction in the dollar from its historical highs."
According to the Zhitong Finance and Economics APP, a survey conducted by Bank of America shows that as the market prepares for the Fed rate cut, the proportion of investors who believe the dollar will weaken has nearly doubled in the past month. In Bank of America's monthly sentiment survey, about 23% of respondents said that they are most confident in shorting the dollar, the highest proportion this year, up from 8% in July.
The dollar has outperformed most G10 currencies so far this year. However, in the past month, as data suggests that US economic growth may be losing momentum, traders are betting on a significant rate cut by the Fed, leading to the dollar's rally fading. Although the volatility has since decreased, forward trades still reflect expectations of a 100 basis point rate cut by the Fed, up from about 65 basis points a week ago.
Ralf Preusser, interest rate strategist at Bank of America, said: "Investors are no longer concerned that there is significant upside risk for the dollar due to inflation stickiness." "This should lead to an adjustment for the dollar from its historical highs."
