“Investors are closing bearish bets on the dollar by the most since December, helping to lift the U.S. currency to an eight-week high, on speculation the global economic recovery is losing momentum.
Futures traders cut bets for a decline in the U.S. currency versus the euro, yen, Swiss franc and the Canadian dollar, and raised those for a gain in the greenback versus the British pound, according to May 24 data from the Commodity Futures Trading Commission in Washington.
Confidence in the outlook for the nations sharing the euro fell to a seven-month low and U.S. consumer spending rose by less than economists forecast in April, reports showed on May 27. The Dollar Index, which tracks the greenback against the currencies of six major trading partners, has increased 2.7 percent this month.
“The short-squeeze on the dollar is waning to an extent,” said Niels Christensen, chief currency strategist at Nordea Bank AB in Copenhagen. “Uncertainty in the euro is causing a lot of investors to unwind their long positions in the euro, and that’s causing a natural flow back into dollars. A lot of positions have also come off in the riskier emerging market and commodity- based currencies.”
The Dollar Index dropped to 74.581 as of 1:53 p.m. in Tokyo from 74.958 in New York yesterday. The gauge has risen 2.6 percent since falling to a 2 1/2-year low of 72.696 on May 4. It climbed to 76.366 on May 23, the strongest since April 1.”
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