Pro-US Dollar Sentiment at New Highs, USD Forecast to Climb, Negative-Euro Bets Increase

November 12, 2014 - Written by John Cameron

STORY LINK Pro-US Dollar Sentiment at New Highs, USD Forecast to Climb, Negative-Euro Bets Increase

The latest official data from the Commodity Futures Trading Commission (CFTC), published last Friday, revealed that speculators increased their positive bets on the future performance of the US Dollar (currency:USD) to their best level in six years.

The figures revealed that market participants had upped their net Dollar ‘long’ positions (i.e. their predictions that the Buck will strengthen moving forward), to $44.38bn from $42.39bn the preceding week.

Dollar Rate Today:

The Pound to US Dollar exchange rate converts +0.44 per cent higher at 1 GBP is 1.59200 USD.
The Euro to US Dollar conversion rate is +0.38 pct higher at 1.24740 EUR/USD.
The US Dollar to Euro exchange rate is -0.38 pct lower with a conversion rate of 1 USD equals 0.80167 EUR.
The US Dollar to Pound Sterling exchange rate today is converting -0.44 per cent lower at 0.62814 USD/GBP.

US Dollar Strengthens On Interest Rate Forecasts

The move in favour of the Greenback was driven by investor’s forecasts for the timing of the next Federal Reserve interest rate hike. A succession of encouraging US labour market numbers have seen sentiment towards the US economy increase, as evidenced by the benchmark S&P 500’s break to a fresh all-time high above the 2,030 level within the past 24hrs. It now looks highly likely that the Fed will be increasing the American rate of borrowing in the early part of 2015, with some economists that such an action may take place as soon as February. Whilst this continues to be the conventional wisdom in the markets, the US Dollar’s forward progress is forecast to continue.

Bets Against Euro Increase

Elsewhere, the CFTC numbers pointed to a renewed deterioration in sentiment towards the euro (currency:EUR), with the number of net short positions on the single currency (bets against the EUR strengthening) jumping from 165,707 to 179,021. It appears likely that when the next set of CFTC data is published at the end of this week, positions against the euro will have increased further following yesterday’s revelation from the European Central Bank (ECB) that it has slowed the pace of covered bond purchases in order to clear the decks for more aggressive forms of monetary easing. Such a move could readily send the Pound Sterling euro exchange rate up through the psychologically key 1.3000 threshold.

BoE Comments Hold Back Pound Sterling

Meanwhile, speculative sentiment towards the Pound Sterling (currency:GBP) remained more or less unchanged at -7,462 versus a previous -6,247. It appears that market participants continue to be concerned by the tone of recent commentary from Bank of England policymakers which has suggested that a UK interest rate is by no means guaranteed before the end of 2015. Investors had previously considered such an outcome a racing certainty from the UK’s reserve bank.

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TAGS: American Dollar Forecasts Currency Predictions Dollar Poun Forecasts