Net US Dollar USD Long Forecast Fell Ahead of Fed Announcement

September 21, 2015 - Written by Frank Davies

STORY LINK Net US Dollar USD Long Forecast Fell Ahead of Fed Announcement

US Dollar Exchange Rate Forecast and Currency Market News

The global currency markets are driven by speculators – that much is known. According to the World Bank’s latest estimates, over 90% of the $5.3 trillion traded on a daily basis in the market is speculative money, much of it extremely short term in nature and put forward by major global investments banks.

FX ALERT: Will the US Dollar Fall on Revised Fed Interest Rate Hike Expectations?

For this reason, the weekly Commodity Futures Trading Commission (CFTC) statistics, published each Friday afternoon, are considered by FX insiders to be an extremely useful tool. The latest version of the official numbers, out last Friday, provided interesting reading for market participants, showing that the value of net long positions on the US Dollar (currency : USD), (i.e. predictions that the Buck will gain against the other sixteen most actively traded global currencies), had hit their lowest level for over twelve months. The fall from $22.07 bn down to $20.97 bn in the week ending Tuesday September 15th, suggested that most institutional investors had correctly guessed that the US Federal Reserve would not be hiking its headline interest rate last Thursday.

The CFTC data also revealed vastly differing opinions from FX insiders on the likely future trajectory of two currencies which have been considered ‘safe haven’ tenders during recent years. Investors were net short the Japanese Yen (currency : JPY) $26.81 bn according to the most recent stats – this was a considerable jump from the net short $6.66 bn of the previous week, suggesting that market participants feel that the Yen may be heady for a tricky patch. Many analysts believe that newly re-elected Japanese Premier Shinzo Abe will further loosen his nation’s already ultra-loose monetary policy in response to the recent meltdown in China’s equities markets.

CHF, JPY Exchange Rate Outlook Today: Yen and Franc Conversion Rate Forecasts Revised

However, sentiment towards the Swiss Franc (currency : CHF), which has tended to move in tandem with the Yen during the market turmoil of the past few months, went the other way. Investors were net long the Franc to the tune of $3.78 bn last week – a turnaround from the previous week’s net short $6.90 bn. Analysts have amended their Yen and Franc forecasts accordingly.

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