Slight Hopes Supported the US Dollar As Traders Prune Forecast

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Azeez Mustapha

Updated: 13 October 2022

The dollar strengthened against most of its major competitors, with the EURO, the Australian dollar, and gold being the weakest rivals. The pound was firm, posting moderate intraday gains against its US counterpart.

The dollar’s strengthening may be linked to the news over the weekend, which indicates that President Trump has signed four bailout orders.

The speculative interest believes that this will force Congress to rush to the deal.

British Prime Minister Boris Johnson said the government would not hesitate to renew lockdown measures if necessary. A spokesman later announced that they would announce at the end of the week whether to continue opening, adding that they are pretending to act promptly, “under quarantine if the data shows it is necessary.” On the trade side, there has been no EU-related news, although news headlines indicate that a future trade agreement with Japan settled.

Stocks around the world traded in different directions, without a clear direction, which indicates a cautious attitude of investors. However, the yield on Treasury bonds rose.

Gold prices continued to retreat from record highs, with spot gold at around $2025 per troy ounce at the end of the day. Crude oil prices remain stable, with WTI at $42 per barrel.
Traders Prune Forecast on USD Amidst Hopes of a Rebound
For the week ended August 4, the CFTC’s Commitments of Traders report showed that the net short price for the dollar index futures fell by -252 to 6,475 contracts. Rates fell on both sides as the dollar is still at the bottom, losing nearly 10% against a basket of currencies since March.

Speculative long positions fell -2 433 contracts, while short positions fell -2 685 contracts. In terms of European currencies, the net length of euro futures jumped 23,089 contracts to 180,648. The net short length of sterling futures fell -10,682 contracts to 14,727 contracts in the week.

On the safe-haven side, CHF futures net LENGTH jumped +3,218 contracts to 11,660. JPY futures net LENGTH increased +2,922 contracts to 31,429. Commodity currencies covered remained PURE short. Net SHORT for Australian dollar futures declined -3,964 to 1,048 contracts. Besides, net SHORT for NZD futures rose 603 contracts to 1,448 in a week. However, the net SHORT for CAD futures jumped +10,699 contracts to 23,195.