Hedge funds and other large money managers boosted bets on greenback gains against eight major currencies in the last three weeks, in the biggest increase since March 2013, data from the Commodity Futures Trading
The data comes as traders await inflation data from the U.S. due on Tuesday for further cues on the state of the economy. Minutes from the Fed October meeting are due on Wednesday.
"It looks like a big bet on the Fed finally
putting its money where its mouth is," said Sean Callow, a
foreign-exchange strategist at Westpac Banking Corp. in Sydney.
"It looks as though the Fed will indeed kick off its tightening cycle in December, providing a stark contrast to other major central banks and thus providing durable support for the dollar."
The U.S. currency rose against all of its 10 developed-market rivals as traders awaited U.S. inflation data due later in the day for further information on whether the Fed will increase interest rates from near zero next month.
As Bloomberg has reported, futures show a 66% chance the Fed will
announce a rate increase by December 16, up from a 50% possibility at
the end of October. The calculation is based on the assumption that the
effective fed funds rate will average 0.375 percent after the first hike, the agency says.
Minutes from the Federal Reserve’s October meeting will be out on Wednesday.