Dovish Fed rate hike expectations weighing on US dollar – MUFG

By FXStreet FXStreet (Delhi) – Lee Hardman, Currency Analyst at MUFG, notes that the US dollar continues to remain on the defensive against the other major currencies ahead of this week’s FOMC meeting.

Key Quotes

“The dollar index has fallen back into the middle of its trading range which has remained in place throughout most of this year after failing to break decisively above the 100.00-level earlier this month. The paring back of monetary easing expectations for overseas central banks has taken the wind out of the sails of the US dollar rally. The pullback for the US dollar is also being reinforced and likely exaggerated by position adjustment in the near-term as broader financial market conditions have become less favourable for US dollar strength.”

“Weakness in commodity prices, emerging market assets, US high yield investments, and the renminbi are all resulting in more risk-averse trading conditions encouraging a further lightening of long US dollar positions. The latest IMM report revealed that long speculative US dollar positions still remained elevated in the week ending the 8th December although they have likely since adjusted lower.”

“Long US dollar positions are likely to be lightened further ahead of the upcoming FOMC meeting given the risk that …read more

Source:: FX Street