Credit: REUTERS/By Caroline Valetkevitch
NEW YORK, Aug 3 (Reuters) - The dollar was up against a basket of currencies on Monday as investors unwound some recent short positions following the currency's weakest monthly performance in a decade.
The dollar index =USD, which measures the greenback against a basket of leading currencies, posted a more than 4% decline for July, its biggest monthly drop since September 2010.
The weakness has been tied to market expectations for further easing of U.S. monetary policy, and a lack of agreement among U.S. lawmakers on further fiscal stimulus. Falling U.S. bond yields have also been cited as a factor.
The day's gains may be tied to investors partially moving out of the crowded short position, strategists said.
"Sentiment was overdone," said Marc Chandler, chief market strategist at Bannockburn Global Forex. "The swing in the pendulum of market sentiment hit such an extreme," which allowed for some unwinding of those short positions, he said.
"I don't expect it to last long," he added.
The dollar pared gains following weaker-than-expected U.S. economic data. U.S. construction spending fell to a one-year low in June; economists had forecast an increase.
The dollar index was last up 0.5% =USD at 93.836.
Speculators' net shorts on the U.S. dollar have soared to their highest since August 2011 at $24.27 billion, Reuters calculations and U.S. Commodity Futures Trading Commission data show. IMM/FX
Against the Japanese yen, the dollar gained 0.4% to push past the 106-yen-per dollar mark. JPY=
On Friday, the dollar posted its biggest daily rise against the Japanese currency since March, halting a rally in the yen which saw it gain 3% in July.
Japanese Finance Minister Taro Aso described the yen's recent rise as "rapid" on Friday, signaling concern that a strong currency could do more damage to an export-led economy already in recession.
A growing U.S. fiscal deficit to finance the stimulus prompted Fitch Ratings to revise its outlook on the United States' triple-A rating to negative from stable.
Sentiment on the euro has improved after European Union leaders agreed last month to a 750 billion euro ($882 billion) economic recovery fund while also taking on debt jointly in a show of regional cooperation.
The single currency last traded at $1.1727 EUR=EBS, down 0.4%. It hit a two-year high of $1.1908 reached last week.
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Currency bid prices at 10:47AM (1447 GMT)
Description
RIC
Last
U.S. Close Previous Session
Pct Change
YTD Pct Change
High Bid
Low Bid
Euro/Dollar
EUR=
$1.1727
$1.1774
-0.40%
+4.62%
+1.1796
+1.1698
Dollar/Yen
JPY=
106.3000
105.8800
+0.40%
-2.35%
+106.4600
+105.5900
Euro/Yen
EURJPY=
124.69
124.68
+0.01%
+2.25%
+125.0600
+124.0200
Dollar/Swiss
CHF=
0.9237
0.9127
+1.21%
+0.00%
+0.9240
+0.9115
Sterling/Dollar
GBP=
1.3012
1.3088
-0.58%
+0.00%
+1.3111
+1.3006
Dollar/Canadian
CAD=
1.3419
1.3413
+0.04%
+3.33%
+1.3450
+1.3390
Australian/Dollar
AUD=
0.7087
0.7142
-0.77%
+0.94%
+0.7149
+0.7077
Euro/Swiss
EURCHF=
1.0834
1.0755
+0.73%
+0.00%
+1.0838
+1.0754
Euro/Sterling
EURGBP=
0.9011
0.8995
+0.18%
+0.00%
+0.9014
+0.8983
NZ Dollar/Dollar
NZD=
0.6579
0.6632
-0.80%
+0.00%
+0.6642
+0.6576
Dollar/Norway
NOK=
9.1553
9.0860
+0.76%
+0.00%
+9.1763
+9.0729
Euro/Norway
EURNOK=
10.7394
10.7416
-0.02%
+0.00%
+10.7861
+10.6923
Dollar/Sweden
SEK=
8.7827
8.7680
-0.43%
+0.00%
+8.8083
+8.7556
Euro/Sweden
EURSEK=
10.3003
10.3450
-0.43%
+0.00%
+10.3515
+10.2885
GRAPHIC: Dollar's worst monthly performance in a decadehttps://tmsnrt.rs/3k28ghc
GRAPHIC: World FX rates in 2020https://tmsnrt.rs/2RBWI5E
(Reporting by Caroline Valetkevitch; Additional reporting by Ritvik Carvalho in London; Editing by David Goodman, Hugh Lawson and Jonathan Oatis)
((caroline.valetkevitch@thomsonreuters.com; +1 646 223 6393; Reuters Messaging: caroline.valetkevitch.thomsonreuters.com@reuters.net))
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
