Traders Up the Bets on the US Dollar (currency : USD) to Outperform Peers in Near-term

July 19, 2016 - Written by Frank Davies

STORY LINK Traders Up the Bets on the US Dollar (currency : USD) to Outperform Peers in Near-term

The Dollar might be able to advance against most of its peers tomorrow, should the claims stats for July be reduced against predictions.

Hopes remain high for the continued strength of the US Dollar in the near-term, especially after the latest clean sweep of US housing data that send the 'Buck' soaring.

CFTC Data Provokes US Dollar Exchange Rate Gains

Global currency traders always pay close attention to the weekly Commodity Futures Trading Commission (CFTC) data, published every Friday afternoon. The latest version, published as last week’s session drew to a close, made for interesting reading, pointing to a continued surge in positive bets on the US Dollar (currency : USD).

The CFTC figures revealed that speculators had increased their Dollar-denominated holdings during the seven days leading up to Tuesday 12th July by the largest amount since the start 0f June, from the $4.18 bn of the previous week up to a heady $8.01 bn. Analysts suggest that the move in favour of the Buck was driven by anxiety amongst investors regarding the possible effects of last month’s Brexit vote on the UK economy.

However, there would appear to be more to the move than this; the move was the ninth straight week that institutional bets on the Greenback had increased for the ninth month on the trot and analysts suggested that it was the improved tone of recent US data sets which were driving the move. Samarjit Shankar of BNY Mellon explained that the most recent set of US labour market data, published earlier in the month, ‘confirms that a Fed rate hike by year-end may not be completely ruled out, especially if expectations of contagion from the June's UK vote rapidly dissipate.’

Positive Market Sentiment Weighs on JPY Exchange Rates

Elsewhere in the CFTC figures, there was substantive evidence that the mood towards the Japanese Yen (currency : JPY) had eased; the latest figures pointed to a significant reduction from the previous week’s JPY63.57 bn net long positions down to JPY47.55 bn.

The shift out of the ultra-safe have Yen coincides with a sustained improvement for global shares and with the emergence of market whispers suggesting that the Bank of Japan (BoJ) will be loosening its already loose monetary policy at the end of the month.

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TAGS: American Dollar Forecasts Japanese Yen Forecasts