Dollar Bullish Bets Hit $40 Billion, Highest Since 2015 on Fed Rate-Hike Expectations

This article was published on Hankyung Global Market, South Korea’s largest platform for overseas investment information.

Bullish bets on the U.S. dollar have climbed to their highest level in more than a decade as expectations grow that the Federal Reserve will raise interest rates again.

Data from the U.S. Commodity Futures Trading Commission released on July 6 showed global traders’ bullish bets on the dollar had risen to about $40 billion as of June 30. That was the highest level since December 2015.

The dollar rose 2% in June. Expectations that interest rates will stay higher for longer have added momentum to the greenback. Major financial firms including JPMorgan Chase, Bank of America and Goldman Sachs have also projected a rebound in the dollar. Bloomberg reported that while other major central banks have been less inclined to keep raising rates, the Fed is expected to maintain a comparatively aggressive tightening stance. That outlook has fueled the dollar’s strength.

Markets are pricing in at least one Fed rate increase this year. CME FedWatch shows a 45% chance of a 0.25 percentage-point increase in the benchmark rate by October. Andrew Hazellit, a foreign-exchange trader at Monex, said most of the factors behind the dollar’s strength stem from interest-rate expectations.

Myung-hyun Han, Hankyung.com reporter, wise@hankyung.com