Net long positions on the U.S dollar fall sharply to its weakest since July 2017

on Mar 14, 2020
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  • Net long positions on the U.S dollar fall sharply to its weakest since July 2017.
  • USD net long positions records $2.22 billion last week versus $17.28 billion in the week before that.
  • U.S Federal Reserve is expected to cut rates again by 75 basis points in the next week

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The last week wasn’t too kind for the U.S dollar. According to the data presented by the Commodity Futures Trading Commission of the U.S in collaboration with Reuters on Friday, the net long positions of the speculators in the U.S dollar saw a steep decline in the past week to record its weakest reading since mid-2017.

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As per the data, the net long positions in the U.S dollar amounted to $2.22 billion in the week that ended on March 10th that marked a massive decline from $17.28 billion that was recorded in the week before that.

NETUSDFX Posts $471 Million Versus $14.876 Billion In The Previous Week

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Net contracts of the speculators of the International Monetary Market in the British Pound, Euro, Japanese Yen, Canadian Dollar, Swiss Franc, and Australian dollar derived the aforementioned U.S dollar net long positioning.

In terms of NETUSDFX that is known as a broader indicator of dollar positioning, the net long positions in the U.S dollar amounted to $471 million in the same week that dropped significantly from $14.876 billion that was recorded in the week before that. NETUSDFX also covers net contracts on the Mexican Peso, New Zealand Dollar, Russian Ruble, and Brazilian Real.

Originally, the downfall of the U.S dollar was attributed to its losses against two major currencies; Swiss Franc, and the safe-haven Japanese Yen. Due to the announcements from global central banks regarding a change in monetary policies, however, the greenback was seen recovering most of its weekly losses against such currencies. Multiple central banks from across the globe resorted to adding fiscal stimulus in order to protect the economy against the impact of Coronavirus emergency.

U.S Federal Reserve May Cut Rate Again By 75 Basis Points In The Next Week

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Following a plot twist that resulted in the net short positions on the Swiss Franc and Japanese Yen turning into net long positions, the damage to the U.S dollar bullish bets deepened further. As per the market expectations, the U.S Federal Reserve is likely to opt for another 75 basis points of a rate cut in the upcoming week in which case, the pressure on the greenback is likely to skyrocket again.

In the forex market, the EUR/USD currency pair was reported particularly volatile in the past week. The pair rallied close to around 1.15 level at the start of the week that was followed almost immediately with a downturn that printed a weekly low of 1.1055. EUR/USD closed the last week at 1.1102 level.

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