Asset managers have extended their bearish bets on the dollar to record highs, according to data from Bloomberg. A decrease in US inflation is seen as the cause of the rise in bets against the US dollar, which could hasten the end of the Federal Reserve System’s (FRS) run of interest rate increases.

According to statistics from the Commodity Futures Trading Commission and Bloomberg, institutional investors like pension funds, insurance firms, and mutual funds boosted their short dollar positions across eight currency pairs by 18% to 568,721 contracts.

Although speculative rates against the US dollar reached record highs, there are several elements to take into account that could impact their dynamics in the future. First, a drop in anticipated inflation could reduce the Fed’s need to raise interest rates further.

Second, the dollar may suffer from trade conflicts between the US and other nations, like China. Thirdly, market uncertainty and volatility can be caused by political events like elections and reforms.

Lowering the dollar rate could ease Asian debt loads and increase exports. However, potential trade conflicts between the US and Asian nations might engender apprehension and harm the value of Asian currencies.

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