Dollar sturdy after 4 consecutive weeks of advances

  • Graphic: World FX charges

Oct 4 (Reuters) – The greenback consolidated good points towards its rivals on Monday after 4 consecutive weeks of will increase as widening considerations in regards to the Chinese property sector and agency U.S. Treasury yields have inspired hedge funds to ramp up their lengthy positions.

After spending the second quarter of 2021 on the again foot the greenback has obtained a recent increase in current weeks, climbing to its highest ranges in a yr towards its rivals final week as prime funding banks have revised up their forecasts.

Every different main foreign money weakened towards the dollar final week with merchants now firmly eyeing on the U.S. jobs knowledge for September due on Friday to resolve on whether or not the Fed will press the button on its resolution to taper its bond purchases.

“The dollar’s recent gains boil down to three sources: bets that the Fed will begin its rate hike campaign next year, investors searching for shelter from the equity market storm, and hopes the U.S. economy is heavily shielded from the global power crisis,” mentioned Marios Hadjikyriacos, a strategist at brokerage XM.

Citigroup strategists count on extra upside within the greenback as a consequence of challenges within the Chinese actual property sector, larger U.S. yields not pushed by a worldwide financial restoration and the unfavourable affect for vitality importers.

Shares in embattled developer China Evergrande (3333.HK) have been halted in Hong Kong, rekindling market nerves about the opportunity of contagion. learn extra

A bullish greenback can be supported by Kit Juckes, a strategist at Societe Generale, who’s bearish on the euro.

The greenback’s good points have been extra pronounced towards a few of its prime rivals with the dollar scaling a 14-month excessive on the euro and a 19-month peak versus the yen final week as markets reckoned U.S. rates of interest might rise forward of worldwide friends.

In London buying and selling on Monday, the euro dipped again under $1.16 and at $1.1598 will not be removed from final week’s trough at $1.1563.

Versus a basket of its rivals, the greenback was broadly regular at 93.96 after gaining for 4 consecutive weeks, its greatest rising streak since late June, in line with Refinitiv knowledge.

Latest weekly positioning knowledge confirmed hedge funds have elevated their greenback holdings towards its rivals to its highest ranges since November 2019.

The greenback’s good points has additionally infused life within the moribund foreign money volatility markets with a gauge measuring every day swings rising to its highest ranges in 2-1/2 months at 6.2%.

With Chinese markets shut for a vacation, merchants consideration will probably be firmly centered on month-to-month U.S. jobs knowledge on Friday that analysts consider will pave the way in which for U.S. policymakers to strike a extra hawkish tone. Yields on benchmark 10-year U.S. Treasury debt have been holding close to their highest ranges in additional than three months at 1.47%.

Friday’s U.S. labour knowledge is anticipated to indicate continued enchancment within the job market, with a forecast for 460,000 jobs to have been added in September – sufficient to maintain the Federal Reserve on track to start tapering earlier than yr’s finish.

“The market senses that if U.S. employment data stay robust in coming months, Fed rate hikes may not be too far behind an end to tapering in 2022,” Credit Suisse strategists mentioned in a quarterly outlook be aware.

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Reporting by Saikat Chatterjee; further reporting by Tom Westbrook in SINGAPORE; enhancing by Alex Richardson

An employee counts U.S. dollar bills at a money exchange in central Cairo, Egypt, March 20, 2019. REUTERS/Mohamed Abd El Ghany./File Photo

USD positions