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Hedge funds up bets on Fed rate hike slowdown

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Hedge funds are increasing their bets against the US dollar as speculation grows that the US Federal Reserve is set to slow the pace of recent interest rate hikes aimed at curbing inflation, according to a report by Bloomberg.

The report cites data from the Commodity Futures Trading Commission on eight currency pairs as revealing that bearish bets against the US dollar increased to 30,457 contracts last week, the highest level seen since August 2021. After data on Friday showed that US wage growth eased last month, Swap contracts show that investors now expect the US policy rate to peak below 5%, down from 5.06%.

The dollar’s recent decline has boosted Asian currencies with the South Korean won gaining about 2% on Monday while the Australian dollar advanced by as much as 0.9% to a four month high of 69.30 cents.

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