WASHINGTON: Traders have turned the most optimistic on the US dollar in more than a year as the war in the Middle East supports the currency’s status as a haven.
Hedge funds, asset managers and other speculators accumulated US$27.8bil worth of bets that the dollar will strengthen as of June 9, according to Commodity Futures Trading Commission (CFTC) data released last Friday and compiled by Bloomberg.
It’s the most since February 2025.
The positioning signals a buildup in bullish sentiment for the world’s primary reserve currency, which has risen since the war broke out in late February, showing a strong sensitivity to a surge in oil prices.
A Bloomberg gauge of the dollar is up about 1.6% since the United States and Israel attacked Iran, also supported by haven buying and strong US economic data.
“The fundamental picture continues to point in the bullish direction for the dollar,” said Alex Cohen, a foreign-exchange strategist at Bank of America Corp.
Speculative traders have been holding bets on a stronger US currency for the past 13 weeks, according to the CFTC data.
That marked a shift from before the war, when traders had about US$22bil of wagers tied to a weaker greenback.
The CFTC’s figures offer investors a glimpse into sentiment in the US$9.5-trillion-a-day foreign-exchange market, showing how hedge funds and asset managers are positioned using derivatives.
In the latest data, leveraged funds also boosted their negative bets on the Japanese yen to the most since 2017.
That positioning comes as the currency trades around 160 versus the dollar, a level seen earlier this year when Japanese officials intervened to support it. — Bloomberg
