Dollar weakness looks to have room to run after the Federal Reserve said further interest rate hikes would be data dependent, bolstering traders’ confidence that the US tightening cycle is near an end.
Bloomberg’s gauge of the US currency fell for a third session Thursday, bringing this year’s losses to more than 3% after the Fed raised rates by a quarter point and emphasized its next move will depend on incoming economic data. The greenback weakened against every Group-of-10 peer in Asia trading, with New Zealand and Australia’s currencies leading gains.
The Fed’s messaging gave fresh fuel to a rising chorus of dollar bears like AllianceBernstein Holding LP and M&G Investments who see a slowing US economy tempering the Fed’s appetite for future hikes and validating the case for a weaker greenback. Asset managers have boosted their short dollar bets to a record level, while hedge funds also flipped to a net short position on the US currency this month, Commodity Futures Trading Commission data show.
“We see a lot of dollar selling from our institutional clients,” said Noel Dixon, global macro strategist at State Street Global Markets. “The market wants to latch on to any whiff of the immaculate disinflation narrative. We see it in our internal indicators.”
The Bloomberg Dollar Spot Index fell 0.3% Thursday. Asia’s emerging market currencies also rallied, with Thailand’s baht and the Malaysian ringgit advancing most. An MSCI gauge of developing currencies has risen almost 3% this year, paring last year’s 4% loss.
For HSBC Holdings Plc strategists including Daragh Maher, the key for the US currency will be whether inflation can continue to slow toward the Fed’s target, without a deep economic downturn.
“If the US data supports this Goldilocks scenario, which it mostly has done lately, then the grind lower in the dollar could resume,” the strategists wrote. “However, sticky US inflation or a more marked deceleration in activity would likely see the dollar rally through rates and risk aversion.”
A former Alabama investment advisor and ex-Kestra rep has been permanently barred and penalized after clients he promised to protect got caught in a $2.6 million fraud.
As more active strategies get packaged into the ETF wrapper, advisors and investors have to look beyond expense ratios as the benchmark for value.
Survey finds AI widely embedded in research and analysis, but barely touching portfolio construction or trade execution.
Two firms land teams managing more than $1.1 billion in combined assets from Kestra and Edward Jones.
A private partnership, Edward Jones is a giant in the retail brokerage industry with more than 20,000 financial advisors.
Wellington explores how multi strategy hedge funds may enhance diversification
As technical expertise becomes increasingly commoditized, advisors who can integrate strategy, relationships, and specialized expertise into a cohesive client experience will define the next era of wealth management
