What matters most is traders are short dollars
Oct 14 (Reuters) -What matters most is that traders are short dollars against three of four major currencies and it's rising.
Traders are short $16 billion versus the euro, the pound and the yen and they have also recently established a $2 billion short against Australia's dollar, which has dropped from over 0.69 toward 0.67.
The USD index has gained around 3% in October with EUR/USD - which is 58% of the index - dropping from above 1.12 toward 1.0900, yet traders have retained many of the bullish bets they held when the pair was trading at this year's peak.
This year's high fell below last year's high, and this year's range is within last year's. The hoped for break from ranges that have trapped EUR/USD since the start of 2023 hasn't unfolded, and once prosperous short positions are certainly less so now. They may be costing traders money.
In one respect many shorts do cost trades because the U.S. interest rate is higher than the eurozone's and far higher than Japan's. Those short dollars are certain to see their profits diminished, or losses bolstered by interest rates.
Should the dollar continue to rise, then it could trigger a short squeeze that would accelerate the rally. There is a strong chance that traders pare risk ahead of next month's U.S. election and the end of the year, underpinning the greenback.
For more click on FXBUZ
FX bets https://tmsnrt.rs/40mrAxt
(Jeremy Boulton is a Reuters market analyst. The views expressed are his own)
</body></html>Related Assets
Latest News
Disclaimer: The XM Group entities provide execution-only service and access to our Online Trading Facility, permitting a person to view and/or use the content available on or via the website, is not intended to change or expand on this, nor does it change or expand on this. Such access and use are always subject to: (i) Terms and Conditions; (ii) Risk Warnings; and (iii) Full Disclaimer. Such content is therefore provided as no more than general information. Particularly, please be aware that the contents of our Online Trading Facility are neither a solicitation, nor an offer to enter any transactions on the financial markets. Trading on any financial market involves a significant level of risk to your capital.
All material published on our Online Trading Facility is intended for educational/informational purposes only, and does not contain – nor should it be considered as containing – financial, investment tax or trading advice and recommendations; or a record of our trading prices; or an offer of, or solicitation for, a transaction in any financial instruments; or unsolicited financial promotions to you.
Any third-party content, as well as content prepared by XM, such as: opinions, news, research, analyses, prices and other information or links to third-party sites contained on this website are provided on an “as-is” basis, as general market commentary, and do not constitute investment advice. To the extent that any content is construed as investment research, you must note and accept that the content was not intended to and has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such, it would be considered as marketing communication under the relevant laws and regulations. Please ensure that you have read and understood our Notification on Non-Independent Investment. Research and Risk Warning concerning the foregoing information, which can be accessed here.
