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Halftime Report: Big Investors Betting on Dollar Rise

The dollar went on a roller coaster ride Monday as investors awaited comments from Federal Reserve Chairman Ben Bernanke and continued to digest recent data on the crucial labor market.

As you likely know, Friday's jobs report showed employers cut far fewer jobs than expected in November.

While the report was positive, it also fueled speculation that interest rates could rise sooner than expected. Keeping interest rates near zero has been part of the Fed's efforts to pull the economy out of recession, and some fear the central bank will raise rates before a recovery has been firmly established.

What must you know?

Options traders seem to be hedging their bets against the weak dollar / strong commodities trade, reveals Mike Khouw of Cantor Fitzgerald.

I’m seeing investors pay up for calls in the dollar and buying downside puts for protection in things like gold . That kind of trading suggests to me that big investors are getting ready for a move higher in the dollar.

I’m also expecting the dollar to make gains after the speech, adds OptionMonster Jon Najarian.

It's true that the dollar has held its long term levels of support, says Joe Terranova. That suggests we see a little recovery here.

But I also think the highs for the dollar come in Q1 2010. Ultimately, Bernanke and the Fed want higher asset values. As a result I think an orderly decline in the dollar will remain the trend long-term.


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Trader disclosure: On December 7th, 2009, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s Fast Money were owned by the Fast Money traders; Adami Owns (AGU), (C), (GS), (INTC), (MSFT), (BTU), (NUE); Seymour Owns (CHL), (AAPL), (BAC), (GE), (MSFT); Najarian Owns (AAPL) Calls; Najarian Owns (BAC) Calls; Najarian Owns (DD), Owns (DD) Calls Spread; Najarian Owns (GE) Calls; Najarian Owns (INTC), Is Short (INTC) Calls; Najarian Owns (TXN), Is Short (TXN) Calls

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