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The US dollar is heading for the biggest weekly loss in three months, pulling back from the sharp run up fueled by speculation that Donald Trump’s policies will push the currency higher.
See full article from Bloomberg
Bloomberg’s gauge of the US currency slipped 0.2% Friday, extending the week’s decline to 1.1%. The yen was the biggest beneficiary, advancing more than 3% against the greenback this week, as bets grow on the Bank of Japan raising interest-rates next month.
“The dollar was over due for a consolidation after the Trump election euphoria sent it higher and into over-extended territory,” said Brad Bechtel, global head of FX at Jefferies. “The euro, yen and pound had all traded well below where real rate differentials implied for fair value against the dollar, and that has finally started to correct.”
Bloomberg Dollar Gauge Heads for First Down Week in Nine
Greenback boosted by Trump, Fed in October and November
Some of the pullback for the dollar came after Trump announced the nomination of Scott Bessent as Treasury Secretary, a hedge fund veteran who was seen as likely to take a relatively traditional approach to economic policy. Much of the dollar’s jump reflected expectations that Trump’s tariffs would fuel inflation and help keep interest rates elevated.
The euro was little changed after gaining 1.3% this week, bouncing back after last Friday hitting the lowest in two years.
The yen gained as much as 1.3% Friday to 149.54 per US dollar after Tokyo inflation accelerated more than expected in November, feeding into speculation over a possible December rate hike.
Month-end flows are also weighing on the dollar as well as traders cutting their bets on the greenback further advances, according to Helen Given, a foreign-exchange trader at Monex.
Speculators Boost Dollar Longs After Election Results
They hold some $23.3 billion in long wagers on the greenback
“Traders have spent the last month going long dollar against the Group-of-10 currencies on election risks and news from the incoming administration,” Given said. “Now they see the actual nominations and curtail their long dollar bets.”
Speculative traders boosted their bets on dollar gains in the week ending Nov. 19 to the most bullish level since late June, Commodity Futures Trading Commission data show. They switched to long dollar bets mid-October. The CFTC will report new data Monday.
