March 31 (Reuters) – There is a strong trend evident where the currencies of higher yielding commodity producers are attracting a great deal of investment, with buying often intensifying ahead of expected interest rate hikes.
Against such a backdrop the dollar should do very well. U.S. interest rates are set to rise steeply, reaching 2.5-3.0 percent by next March. Although this is lower than the interest rates of some of the other commodity currencies currently in favour, the dollar is much safer, far more liquid and the U.S. economy is much bigger. U.S. interest rates may rise far above those supporting other commodity currencies which have soared, such as Norway’s crown, Australian dollar, and perhaps the New Zealand and Canadian dollars. Traders are short dollars versus emerging market currencies and the euro, and the net bullish bet at $12.6 billion is a fraction of the $40 billion held when U.S. interest rates were last at 2.5 percent. The United States is a big producer of oil and gas as well as agricultural products and rare earth metals, for which demand should be heightened by war in Ukraine.
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<^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^ USD TWI and bets https://tmsnrt.rs/3iO8tFl ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^> (Jeremy Boulton is a Reuters market analyst. The views expressed are his own) ((firstname.lastname@example.org))