After two consecutive sessions of losses, the dollar has edged higher today (Oct 4), as hedge funds increase their holdings as concern rises for the Chinese property sector and resilient U.S. Treasury yields have enhanced demand.
Throughout the 2nd quarter, the dollar has been struggling to find its footing, but recently received a new boost in recent weeks, climbing to its highest point in a year against its competitors, as top investment banks increase their forecasts.
Citigroup strategists believe we can expect to see more growth in the dollar due to the challenges faced by the Chinese real estate sector, higher U.S. yields not propelled by a global economic recovery and the adverse impact for energy importers. Shares have also been paused for the struggling Chinese property giant Evergrande, which has caused an increase in market uncertainty surrounding the world’s most indebted real estate developer.
The dollar’s rise has seen it scale to a 14-month high on the euro and 19-month high against the yen, as markets calculated U.S interest rates would rise ahead of its global associates.
According to Reuters, positioning data has recently shown that hedge funds have increased their dollar holdings against its rivals to its highest levels since November 2019. These gains have also shown a rise in volatility, with daily swings increasing to its highest level in 2 ½ months – at 6.2%.
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