Connect with us

Hi, what are you looking for?

Investing Ideas

Dollar Bears on the Run as Bets Turn Positive for First Time Since Pandemic

Forex26 minutes ago (Jul 23, 2021 04:44PM ET)

(C) Reuters.

By Yasin Ebrahim

Investing.com – The dollar ended flat Friday, but traders are warming up to the idea of that greenback’s run higher is here to stay, as bets on the world’s reserve currency turned positive for the first time since the pandemic began.

The U.S. dollar index, which measures the greenback against a trade-weighted basket of six major currencies, rose 0.06% to 92.885. Earlier this week, the greenback rose to 93.195, a nearly four-month high.

The value of the net long dollar position was $399.69 million in the week ended July 20, the first long position since March 2020, compared with a net short of $4.06 billion the previous week, according to calculations by Reuters and U.S. Commodity Futures Trading Commission data released on Friday.

A patient Fed and a further recovery in the global economy – two key ingredients for the bearish thesis on the dollar – have come under pressure in the recently, helping to shift sentiment on the greenback.

“The combination of a less dovish Fed and the Delta Variant has certainly hit portfolio flows to emerging markets, which have been negative in five out of the last six weeks,” ING said in a note earlier this week. “This has certainly provided support to the dollar. It is hard to see this trend turning in the immediate future.”

The Federal Reserve’s two-day meeting is just days away, and could provide further runway for the dollar to advance.

While there aren’t many on Wall Street betting for a surprise change in monetary policy, further clues from the Fed on trimming its bond-purchases is expected to make a positive impact on the dollar.

“Assuming that the Fed continues to dangle the carrot of a September tapering and the global growth environment remains mixed at best, we suspect the dollar can retain its gains, if not edge higher,” ING added.

Further commentary on tapering could also set the stage of the rally in Treasury yields, which have steadied since dropping below 1.14% earlier this week.

“Our strategists think the July FOMC could be an important catalyst for higher yields. An upbeat assessment of the economy from the Fed and continued discussion of tapering could ring hawkish to the market, especially given the benign pace of hikes priced in,” Morgan Stanley (NYSE:MS) said in a note.

Dollar Bears on the Run as Bets Turn Positive for First Time Since Pandemic

Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.

Click to comment

Leave a Reply

Your email address will not be published. Required fields are marked *

You May Also Like

Uncategorized

Neque porro quisquam est, qui dolorem ipsum quia dolor sit amet, consectetur, adipisci velit, sed quia non numquam eius modi tempora incidunt.

Uncategorized

Nemo enim ipsam voluptatem quia voluptas sit aspernatur aut odit aut fugit, sed quia consequuntur magni dolores eos qui ratione.

Uncategorized

Quis autem vel eum iure reprehenderit qui in ea voluptate velit esse quam nihil molestiae consequatur, vel illum qui dolorem eum.

Uncategorized

Neque porro quisquam est, qui dolorem ipsum quia dolor sit amet, consectetur, adipisci velit, sed quia non numquam eius modi tempora.

Disclaimer: Buzzclever.com it's managers and its employees (collectively "The Company") do not make any guarantee or warranty about what is advertised or above. Information provided by this website is for research purposes only and should not be considered as personalized financial or health advice. Copyright © 2021 Buzz Clever. All Rights Reserved