Advertisement
Advertisement

Long U.S Dollar Bets Fall Amid Exciting Jobs Data

By:
Olumide Adesina
Updated: Nov 7, 2021, 06:45 UTC

Net long dollar positions decreased from $20 billion to $19.51 billion for the week ended Nov. 2. This is the fourth consecutive decline in net long dollar positions

fed_logo_on_dollar_bill fxempire

Despite positive economic data from the world’s largest economy, the US Dollar Index fell to 94.2 index points, down by over 140 basis points on Friday.

In a better-than-expected US nonfarm payrolls report, more than 425K new jobs were added to the economy, giving the US Dollar Index a boost to new yearly highs, around 94.62. US Treasury yields, however, are falling, with the 10-year benchmark falling to 1.458% for the first time since October 4.

U.S. Commodity Futures Trading Commission data released on Friday indicate that long bets on the U.S. dollar have fallen to their lowest level since late September.

Net long dollar positions decreased from $20 billion to $19.51 billion for the week ended Nov. 2. This is the fourth consecutive decline in net long dollar positions.

The dollar positioning was calculated based on contracts entered into by speculators in the Japanese yen, euro, British pound, Swiss franc, Canadian dollar, and Australian dollar.

As markets anticipate the start of the Fed’s hike cycle, the greenback’s net long position remained substantial, though.

Participants in the market viewed the Fed’s policy statement as dovish on Wednesday.

It announced that it would reduce asset purchases in the coming months, but it held on to its view that the surge in inflation is temporary.

A strong U.S. job report for October offset losses seen after the Fed statement to end the week little changed for the dollar index. The dollar index has gained about 5%  year-to-date.

Consequently, the euro’s net short position fell sharply to -6,138 contracts, equivalent to nearly $900 million. Christine Lagarde of the European Central Bank also fought off market expectations that interest rates could be hiked as soon as next year due to price pressures.

The euro has lagged behind this year, down 5.3% so far in 2021

The US dollar bulls need a break above 94.6 to accelerate the uptrend. After that, 95 would be the next resistance area.

About the Author

Olumide Adesina is a France-born Nigerian. He is a Certified Investment Trader, with more than 15 years of working expertise in Investment trading. He is a Member of the Chartered Financial Analyst Society.

Did you find this article useful?

Advertisement