Dollar Flat as Short-Squeeze Trade Nearing End, Experts Say – Investing.com India
- Date: 13-Apr-2021
- Source: Investing.com
- Sector:Economy
- Country:Middle East
Dollar Flat as Short-Squeeze Trade Nearing End, Experts Say – Investing.com India
By Yasin Ebrahim
Investing.com – The dollar was flat against a basket of major currencies Monday, but experts appear to be pricing in a bumpy road ahead for the greenback as the short-squeeze trade fizzes out and the Federal Reserve continues to dispel talk of a sooner-than-expected rate hike.
The , which measures the greenback's strength against a trade-weighted basket of six major currencies, fell 0.01% to 92.16.
"At this stage, the dollar has lost all its positioning 'advantage,' having a neutral speculative positioning, which suggests we should no longer see dollar rallies against most G10 currencies exacerbated by the unwinding of USD shorts," ING said in a note.
The value of the net short dollar positions dropped to $6.103 billion in the week ended April 6, from $8.22 billion the previous week, according to according to calculations by Reuters and Commodity Futures Trading Commission data released on Friday.
The USD net shorts are now worth only 2% of open interest (a drastic move from the peak at 19% on 19 January), ING added.
But dollar bulls could see further pressure from a fall in Treasury yields, which trade inversely to prices, as investors appear to back the Fed's manta that inflation pressures will prove transitory.
"Although inflation readings