Hedge funds are betting on the decline of the US dollar

Hedge funds are betting on the decline of the US dollar: Goldman Sachs expected the US dollar to decrease
after the US central bank indicated a reduction in interest rates.

Goldman Sachs made changes to its exchange rate forecasts after the Federal Reserve
indicated its intention to reduce interest rates, according to the analysis on Friday.


Expectations of interest rate cuts
Commodity Futures Trading Commission
Currency rates against the dollar
Change Goldman’s forecast



Expectations of interest rate cuts

The Bloomberg Dollar Index fell by 1.2% last week,
reaching its lowest level in four months after the Federal Reserve decided
to keep interest rates as they are, and the impact of the expectation of an interest rate cut of 75 points in the year 2024.

Goldman Sachs analysts said that, according to their expectations,
the dollar will weaken more than before. Analysts also said that the biggest revisions
to their forecasts were in currencies that are affected by interest rates and that could be affected by the highest interest rates ever,
such as the yen, the Swedish krona, and the Indonesian rupiah.


Commodity Futures Trading Commission

Data from the Commodity Futures Trading Commission (CFTC) The combined betting positions on the major currencies
for the week ending last Tuesday resulted in net put contracts worth $26,355.

The biggest shifts were in the yen, as bets on the dollar’s gains against the Japanese currency decreased by more than 20%,
in addition to the British pound, where bets on the dollar’s decline nearly doubled.

Currency rates against the dollar

The yen rose 2% last week against the dollar, while the krone rose 1.9%.
These were the largest gains among the group of ten major currencies,
except the Norwegian krone, which jumped by more than 4% after the central bank suddenly raised the main interest rate on deposits.


Change Goldman’s forecast

Goldman expects that the yen price will not change much from 142 yen to the dollar in six months,
which is much stronger than its previous estimate of 155.
It also strengthened expectations for the Australian and New Zealand dollars by at least 9% during the same period.

“We see the greatest ‘room for departure’ from current levels to be in procyclical currencies
(which rises if the economy is strong and falls if the economy is weak)
and should benefit from the Fed loosening its grip on financial conditions and enhancing expectations of a soft landing,” the strategists wrote.
This group includes the British pound, the South Korean won, and the South African rand.


Hedge funds are betting on the decline of the US dollar