PiCK

Dollar short positions at their highest level in 14 years

JH Kim

Summary

According to Walter Bloomberg, short positions against the dollar expanded to their highest level in 14 years.
Bank of America said that as of February, dollar positioning was at its most bearish level since January 2012, representing the largest scale of dollar short bets since the data began to be compiled.
Respondents cited further deterioration in the U.S. labor market as the dollar’s main downside risk, assessing that if the labor market cools, downward pressure on the dollar could persist.

According to Walter Bloomberg on the 16th (local time), short positions against the dollar were found to have expanded to their highest level in 14 years.

According to Bank of America’s latest FX and rates sentiment survey, as of February, dollar positioning turned to its most bearish level since January 2012. This marks the largest scale of dollar short bets since the data began to be compiled.

Fund managers’ dollar exposure fell below the low seen in April last year. After U.S. President Donald Trump nominated Kevin Warsh as chair of the Federal Reserve (Fed), concerns over the Fed’s independence eased somewhat, but that did not translate into a recovery in dollar demand or an improvement in investment sentiment toward U.S. assets.

Respondents cited further deterioration in the U.S. labor market as the dollar’s main downside risk. The assessment was that if labor-market cooling becomes evident, downward pressure on the dollar could persist.