{"id":104979,"date":"2021-01-23T00:47:36","date_gmt":"2021-01-23T00:47:36","guid":{"rendered":"https:\/\/fin2me.com\/?p=104979"},"modified":"2021-01-23T00:47:36","modified_gmt":"2021-01-23T00:47:36","slug":"dollar-shorts-mount-before-yellen-outlines-market-based-policy","status":"publish","type":"post","link":"https:\/\/fin2me.com\/markets\/dollar-shorts-mount-before-yellen-outlines-market-based-policy\/","title":{"rendered":"Dollar Shorts Mount Before Yellen Outlines Market-Based Policy"},"content":{"rendered":"
The dollar\u2019s downtrend may be set to resume.<\/p>\n
Hedge funds boosted net short positions in the greenback to the highest since April 2018 in the week through Jan. 12, according to data aggregated from the Commodity Futures Trading Commission. They also raised net bullish bets on the pound to the most since October while wagering on the euro and the Australian and New Zealand currencies to rise.<\/p>\n
The bets come as the world\u2019s reserve currency enjoys a reprieve from a two-year slide after U.S. yields climbed to a 10-month high. A renewed bout of weakness in the dollar may amplify scrutiny of the incoming U.S. administration\u2019s policy, with Treasury Secretary-designate Janet Yellen expected to declare that the authorities won\u2019t seek a weaker currency to boost exports in her testimony on Tuesday.<\/p>\n
\u201cThe dollar is still likely to move lower over the course of the year,\u201d Seamus Mac Gorain, head of global rates at JPMorgan Asset Management, said in an interview last week. \u201cMany of the currencies which are more levered to global growth, particularly emerging market currencies\u201d and the Aussie are set to strengthen, he said.<\/p>\n
The Bloomberg Dollar Spot Index has climbed over 1% since sliding to the lowest in almost three years this month. While the gains have fueled talk about a rebound, some including Goldman Sachs Group Inc. and investors in a Bank of America Corp. survey remain steadfast in forecasting a weaker greenback.<\/p>\n
\u201cWe continue to believe that the combination of high dollar valuations, low nominal and real rates, and a rapid recovery in the global economy will weigh on the greenback throughout 2021,\u201d Goldman strategists including Danny Suwanapruti wrote in a Jan. 17 note.<\/p>\n
Yellen is expected to affirm the U.S.\u2019s commitment to market-determined dollar value and give assurances that the U.S. won\u2019t seek a weaker dollar for competitive trade advantage, the Wall Street Journal reported, citing President-elect Joe Biden transition officials familiar with her preparation for her confirmation hearing.<\/p>\n
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\n Clamor for Dollar Spurs One of Biggest Gains Since March Turmoil<\/p>\n Yellen Pressed to Back Strong Dollar in Reversing Trump-Era Tone<\/p>\n Global Investors Still Love Bearish Dollar Trade: BofA Survey<\/p>\n Hedge Funds Head for Cover as Dollar Rebound Gathers Momentum<\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n The U.S. adopted a policy of favoring a \u201cstrong\u201d dollar in 1995. While the mantra did evolve from one Treasury chief to another, no administration from then until the Trump years communicated, as the president did in 2017, that the dollar was \u201cgetting too strong.\u201d<\/p>\n \u201cThis is not the same as the strong-dollar policy of the past,\u201d Khoon Goh, head of Asia research at Australia & New Zealand Banking Group Ltd., said of Yellen\u2019s expected upcoming remarks. \u201cA commitment to market-determined exchange rates implies that the new administration will be comfortable with further dollar weakness.\u201d<\/p>\n |