Is the bottom in for the dollar yet?
After hitting a 14 month low, the Bloomberg Dollar Index saw a modest gain of 0.1% as markets awaited this week’s FOMC meeting and kept a wary eye on Capitol Hill hearings which involve close members of the Trump administration. Quoted by Bloomberg, traders described flows as modest amid the elevated event risk we laid out earlier this morning. Besides another potential surprise from the suddenly dovish Fed, traders were keeping a weary eye on Capitol Hill hearings Monday and Wednesday that include Jared Kushner, Donald Jr and Paul Manafort, and what these could mean for Trump’s fiscal agenda. At the same time, the Fed is expected to keep rates and policies on hold, though it may elaborate on balance-sheet reduction or the timing of any future rate increases.
To be sure, negative sentiment against the dollar has been pervasive, and as we noted yesterday when looking at the latest CFTC Commitment of Traders update, net specs are now the most short they have been the USD doing back to 2013.
This post was published at Zero Hedge on Jul 24, 2017.