The US Dollar's September buyers are now underwater
FXStreet · Joshua Gibson ·
Speculators rebuilt a $45 billion bet on the US Dollar in the four weeks after the Federal Reserve's September hike, and the Dollar Index is back at the average price they paid. A Democratic Congress, cheaper Oil and falling yields now work against that crowd.
Speculators rebuilt a $45 billion bet on the US Dollar in the four weeks after the Federal Reserve's September hike, and the Dollar Index is back at the average price they paid. A Democratic Congress, cheaper Oil and falling yields now work against that crowd.
The US Dollar Index (DXY), which measures the Dollar against six currencies, rose about 4% from early September to its October 14 high and has given back about a third of that since, putting it back at late-September levels and below everything October paid. The Commodity Futures Trading Commission (CFTC), which counts futures bets every Tuesday, shows who did the buying on the way up. A crowd of speculators cut its bet on the Dollar to $6 billion the day before the Federal Reserve (Fed) raised rates on September 16, the first hike since 2023. It rebuilt that bet to $45 billion over the next four weeks.
That bet was placed at index levels between about 100 and 103, and weighted by when the money arrived, the average price paid was about 101, which is where the index is now. September's buyers, meaning the crowd that rebuilt the bet after the hike, are at breakeven as a group: everyone who bought in October is losing money and only the first week's buyers are clearly ahead. The rally they bought ran on the crowd rather than on rates, because the two-year Treasury yield peaked two weeks before the index did, and since the midterm elections the crowd has had three new reasons to leave.
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