The euro stood at $1.1635 on Monday. It traded at $1.16125 on Friday, plummeting down to its lowest level in two months. The British Pound Sterling changed hands at $1.2767, a bit higher than Wednesday’s two-month low of $1.2676.
The Japanese Yen traded at 105.46 against the U.S. dollar. Meanwhile, the greenback nearly reached its two-month high against a basket of currencies on Monday.
On Friday, U.S. stocks rallied, and the dollar stopped its safe-haven ascent. Despite that, signs of a slowdown in the nascent economic rebound along with political uncertainties have kept traders on guard.
The dollar index sat at 95.544 on Monday. It surged forward to a two-month high of 94.745 last week, posting its biggest weekly rise since early April.
However, investors are currently waiting for upcoming economic data and political developments in the United States before making sharp moves. The first U.S. Presidential debate is due on Tuesday as the election in early November is nearing.
What do currency strategists say?
Traders need to be cautious of a weaker common currency due to further unwinding of euro long positions – stated Makoto Noji, the chief currency strategist at SMBC Nikko Securities. According to him, investors have no shortage of concerns in Europe, including a rise of Covid-19 infections and the ECB policymakers’ attempts to talk down the Brexit and the euro.
Meanwhile, Kyosuke Suzuki, the forex director at Societe Generale, noted that few people would be trying to bet on the election outcome. Most investors don’t expect the U.S. Congress to pass any stimulus package. However, they think it is vital to support the pandemic-stricken economy before the election.
New data from U.S. Commodity Futures Trading Commission showed that speculators kept a net short position of $33.989 billion. The flip side of that was a substantial net long position in the euro. It showed a little increase last week to $27.922 billion. Thus far, data on U.S. currency futures positions points to more upside in the greenback’s recovery.
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