Dollar bears eye shifts in global yields

NEW YORK, Oct 03 (Reuters): Traders gauging how to best play a sliding US dollar are eyeing the relative strength of economies around the world, as rate cuts from global central banks shake up currency markets.
The US dollar index fell 4.8 per cent against a basket of currencies in the third quarter of 2024, its worst quarterly performance in nearly two years. Pressure on the US currency increased after the Fed delivered a jumbo-sized 50 basis point cut last month, its first reduction since 2020.
How much further the dollar falls and which currencies will benefit may largely be a question of yields. For years, yields in the US have stood above most developed economies, bolstering the dollar's allure against its peers.
That picture is now shifting, with the Fed and most other central banks cutting interest rates to safeguard economic growth. Many traders betting against the buck are doing so through currencies whose yield gap with the dollar is expected to narrow.
Net bets on a weaker dollar have grown to $14.1 billion in futures markets, the highest level in about a year, data from the Commodity Futures Trading Commission showed. The path lower for the dollar, however, is likely to be a bumpy one.