Investors Ditch US Dollar At The Fastest Pace In A Year
Portfolio Pulse from Neil Dennis
Investors are selling U.S. dollar holdings as expectations grow that the Federal Reserve's rate hike cycle may end, with potential rate cuts in early 2024. The dollar index (DXY) has dropped nearly 3% since November, indicating the worst month in over a year. The Invesco DB USD Index Bearish ETF (UDN) rose 2.8%, while the Bullish Fund ETF (UUP) fell 2.3%. Asset managers are selling dollar positions, with a 1.6% reduction in open dollar positions this month. Foreign investors were net sellers of U.S. Treasuries in September. The iShares iBonds Dec 2033 Term Treasury ETF (IBTO) was down 1.9% in recent trading.
November 24, 2023 | 3:13 pm
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POSITIVE IMPACT
The Invesco DB USD Index Bearish ETF (UDN) has gained 2.8% amid a weakening dollar and investor anticipation of an end to the Fed's rate hikes.
UDN's rise is directly correlated with bearish sentiment on the dollar, which is supported by the current investor behavior and market expectations of an end to the Fed's rate hike cycle.
CONFIDENCE 85
IMPORTANCE 70
RELEVANCE 80
NEGATIVE IMPACT
The iShares iBonds Dec 2033 Term Treasury ETF (IBTO) has decreased by 1.9% as investors sell off U.S. Treasuries amid changing expectations for the Fed's interest rate policy.
IBTO's performance is negatively impacted by the sell-off in U.S. Treasuries, which is a reaction to the potential end of the Fed's rate hikes and the anticipation of rate cuts.
CONFIDENCE 80
IMPORTANCE 60
RELEVANCE 70
NEGATIVE IMPACT
The Invesco DB USD Index Bullish Fund ETF (UUP) has fallen 2.3% as investors move away from the dollar due to the potential end of the Fed's rate hike cycle.
UUP's decline reflects the bearish outlook on the dollar, which is influenced by the market's anticipation of a shift in the Fed's monetary policy.
CONFIDENCE 85
IMPORTANCE 70
RELEVANCE 80