By Yasin Ebrahim
Investing.com – The dollar was flat Monday after snapping its two-week win streak last, but the data continues to show traders are positioning for more upside ahead.
The U.S. dollar index, which measures the greenback against a trade-weighted basket of six major currencies, fell by 0.1% to 92.08.
U.S. dollar net longs climbed in in the week ended July 27, to their highest level since early March last year, according to Reuters calculations and Commodity Futures Trading Commission data released on Friday.
The bullish bets on the greenback come as investors position for a less accommodative Federal Reserve.
“This move in the dollar’s positioning is an indication of how markets continued to increase their bullish sentiment on the greenback, thanks to a less supportive risk environment with growing doubts about the global recovery (which prompted an unwinding of reflationary trades) and to the Fed moving closer to normalising monetary policy,” ING said in a note.
The monthly jobs data due Friday, will take on added importance and could play a role in the Fed’s thinking on tightening monetary policy.
The Federal Reserve kept interest rates steady last week, and pledged to keep a closer eye on progress toward its threshold to start tapering monthly bond purchases at upcoming meetings.
“Following last week’s FOMC meeting, the economic data will take center stage this week – namely, Friday’s July employment report. As Chair Powell noted in his post-meeting press conference last week ‘substantial further progress’ is ‘some ways away’ with the labor market still having ‘some ground to cover,'” Deutsche Bank (DE:DBKGn) said in a note.
“While Powell confirmed that he will give a speech at Jackson Hole, the tapering markers he laid out suggest that event could be too early for a clear signal from the Chair. The September FOMC meeting is thus more likely for advance warning about tapering. With regards to the official tapering announcement, the overall messaging from that meeting was consistent with our baseline expectation for the November FOMC meeting.”
Dollar Flat, but Bullish Bets Continue Ahead of Jobs Data
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