With the financial community abuzz over a looming interest rate hike by the Federal Reserve, the smart money is betting big on the U.S. dollar instead of Treasurys.
Instead of betting on the price of, say, 10-year U.S. government bonds, prominent hedge fund firms—including Bridgewater Associates, Brevan Howard, Tudor Investment and Moore Capital Management—have serious money on a related currency trade.
They are betting “long” that the U.S. dollar will continue to gain in value as the Fed tightens its monetary policy with a rate hike. At the same time, the funds are wagering “short” that countries in the euro zone, Japan and elsewhere will dilute the value of their currencies with fresh rounds of stimulus and low interest rates.
This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.