US Dollar Shorts Become Favorite Trade as Fed Seen Slowing Hikes

(Bloomberg) -- Investors are selling the dollar in droves as bets mount that the Federal Reserve will slow the pace of its interest-rate hikes. Most Read from

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UglyThis Isn’t Your Mom and Dad’s Recession, Says BofA’s SubramanianHuge Sanctions Are Looming for the Fuel That Powers the World The Bloomberg Dollar Spot Index fell to the

lowest in almost nine months on Monday as easing US inflation expectations prompted funds to ditch the ultimate haven asset. Every major currency in the world rallied against the

greenback, with the Australian dollar and the yuan advancing to key levels. “Just two weeks into the year, and it feels like the big ‘buy dollar’ trade of 2022 is turning

into the hottest macro short now,” said Patrick Bennett, strategist at Canadian Imperial Bank of Commerce in Hong Kong. In addition to the Fed, “we are also being driven by a

reversal in China with Zero Covid scrapped well ahead of when it was expected.” The dollar’s fortunes have suffered a dramatic U-turn in recent months as funds from JPMorgan

Asset Management to Goldman Sachs Group Inc. predict the Fed will soon rein in the pace of its tightening. Traders are now expecting the Fed fund rate to peak at 4.94% from more

than 5% earlier this month.