16 Jan

Why the US Dollar Is Losing Its Appeal

WRITTEN BY Ricky Cove

US dollar slides further

The US Dollar Index (UUP) continued its decline, posting a fourth consecutive weekly loss during the week ended January 12. Economic data and other macro events in the US had little to do with the continued decline of the US dollar. 

The hawkish European Central Bank minutes, signaling a possible tightening and the possibility of a softer Brexit, increased the demand for the euro and the British pound. The US Dollar Index closed at 90.73 for the week ended January 12, 2018, depreciating by ~1.0%.

Why the US Dollar Is Losing Its Appeal

Speculators move to net short positions

According to the latest Commitment of Traders (or COT) report, released on January 12 by the Chicago Futures Trading Commission (or CFTC), large speculators have turned bearish on the US dollar.

According to Reuters, the US dollar (USDU) net short positions increased from ~-$4.6 billion to ~-$8.9 billion on Tuesday, January 9. This amount is a combination of the US dollar’s contracts against the combined contracts of the euro (FXE), British pound (FXB), Japanese yen (FXY), Australian dollar (FXA), Canadian dollar (FXC), and the Swiss franc.

Outlook for the US dollar

With respect to the US dollar, December’s industrial production is the key data point for this week. Plus, FOMC member speeches, the uncertainty surrounding the US debt ceiling, and a possible US government shutdown would be key events to watch this week. 

Traders would be looking for signs of a March rate hike in the FOMC (Federal Open Market Committee) member speeches this week. If there are any such signs, we could see some support for the US dollar.

In the next part of this series, we’ll discuss why bond market yields shot up in the previous week.

Latest articles

21 May

What JD Is Set to Get from Its Xinning Deal

WRITTEN BY Rachel Gunter

JD.com (JD) recently invested ~$55 million in purchase a ~10% stake in Jiangsu Xinning Modern Logistics, a Chinese logistics company focusing on the consumer electronics supply chain.

Today, the US stock market was on a path of recovery after starting the week on a bearish note yesterday.

JCPenney (JCP) delivered yet another quarter of disappointing results when it announced its performance for the first quarter of fiscal 2019 today.

Yesterday, dozens of shoe retailers—including big names Nike (NKE) and Adidas—sent an open letter to President Trump requesting that he reconsider tariffs on shoes made in China.

The first-quarter earnings season is nearly over, and most steel companies have released their quarterly earnings results.

The semiconductor industry—and smartphone chipmakers in particular—have started to feel the impact of the Huawei ban imposed by the United States.

172.31.71.127