18 May 2015
USD could still face further downside – Danske bank
FXStreet (Edinburgh) - In the view of Signe Roed-Frederiksen, Senior Analyst at Danske Bank, further downside pressure could still lie ahead for the greenback.
Key Quotes
“On Friday the USD index completed the fifth consecutive weekly decline on the back of not least Wednesday’s disappointing retail sales and Friday’s very weak release of the University of Michigan consumer sentiment”.
“The significant build in bullish dollar bets has increased the vulnerability and sensitivity of the ‘greenback’ and with the disappointing US data a big share of these positions have been unwound”.
“Indeed, the latest CFTC IMM positioning data show that speculators in the week to 12 May reduced their USD exposures for the seventh consecutive week, thereby equalling the time period of the long bet reductions seen at end Q1 14”.
“From a historical perspective, however, noncommercial USD positioning is likely to remain stretched even after the past days’ selloff (at Tuesday close positioning was still very elevated at the 95th percentile)”.
“This highlights the more persistent EUR/USD sensitivity to the upside in times of disappointing US data, as there is still potential in our view for more unwinding of long USD-bets”.
Key Quotes
“On Friday the USD index completed the fifth consecutive weekly decline on the back of not least Wednesday’s disappointing retail sales and Friday’s very weak release of the University of Michigan consumer sentiment”.
“The significant build in bullish dollar bets has increased the vulnerability and sensitivity of the ‘greenback’ and with the disappointing US data a big share of these positions have been unwound”.
“Indeed, the latest CFTC IMM positioning data show that speculators in the week to 12 May reduced their USD exposures for the seventh consecutive week, thereby equalling the time period of the long bet reductions seen at end Q1 14”.
“From a historical perspective, however, noncommercial USD positioning is likely to remain stretched even after the past days’ selloff (at Tuesday close positioning was still very elevated at the 95th percentile)”.
“This highlights the more persistent EUR/USD sensitivity to the upside in times of disappointing US data, as there is still potential in our view for more unwinding of long USD-bets”.