Fed39;s rate cuts and global central banks39; actions impact dollar39;s performance
Economic data and U.S. presidential election add uncertainty to dollar39;s outlook
Investors eye currencies like yen, krone, and real for potential gains
Yen has rallied from 2024 lows as central bank policies diverge
Stillstrong U.S. economy could limit how much the Fed cuts rates

NEW YORK, Oct 3 Reuters Traders gauging how to best play a sliding U.S. dollar are eyeing the relative strength of economies around the world, as rate cuts from global central banks shake up currency markets.

The U.S. dollar index fell 4.8 against a basket of currencies in the third quarter of 2024, its worst quarterly performance in nearly two years. Pressure on the U.S. currency increased after the Fed delivered a jumbosized 50 basis point cut last month, its first reduction since 2020.

How much further the dollar falls and which currencies will benefit may largely be a question of yields. For years, yields in the US have stood above most developed economies, bolstering the dollars allure against its peers.

That picture is now shifting, with the Fed and most other central banks cutting interest rates to safeguard economic growth. Many traders betting against the buck are doing so through currencies whose yield gap with the dollar is expected to narrow.

Net bets on a weaker dollar have grown to 14.1 billion in futures markets, the highest level in about a year, data from the Commodity Futures Trading…