The US Dollar (USD) net long positions increased as investors bolstered their bets on the Greenback, solidifying its position as the best-performing G10 currency in October. The USD’s strength is underpinned by long positions, even as its momentum softened late last week. This uptick arrives as investors digest recent economic data and await a busy week ahead, with the U.S. presidential election on Tuesday and the Federal Open Market Committee’s (FOMC) rate decision on Thursday, where the market anticipates a 25-basis-point rate cut.
USD Outperforms Despite Weaker Jobs Data
The USD remained resilient in October, but this week’s nonfarm payroll (NFP) report underwhelmed. Job growth for October came in at just 12,000, significantly lower than forecasts. This weaker NFP report could weigh on the USD in the near term, yet analysts at Rabobank note that sustained net long positions indicate investor confidence in the currency. However, with an expected 25-bps cut on Thursday, there could be some pressure on the USD if market conditions waver.
Euro Shorts Increase as Inflation Edges Up
The Euro (EUR) saw net short positions increase, fueled by a surge in short bets as investors remain cautious about the European Central Bank’s (ECB) approach to inflation. Despite stronger-than-expected Eurozone CPI inflation at 2.0% year-over-year, the EUR remains under pressure. Analysts expected this could dampen speculation for a significant 50-bps rate cut by the ECB in December, but sentiment remains cautious, driving the EUR to trade in a narrow band.
Also read : Singapore Dollar Strengthens By 0.017%- A New Era For ASEAN Amid US Dollar Decline
British Pound Weakens as Net Long Positions Drop
The British Pound (GBP) experienced its fourth consecutive week of declining net long positions, with traders pulling back amid growing uncertainty around the Bank of England’s (BoE) upcoming meeting. The market currently prices in a 79% probability of a 25-bps rate cut on November 7, reflecting concerns over the UK’s economic resilience. The Pound’s outlook remains uncertain, with analysts at Rabobank indicating that investor sentiment is cautious as the BoE faces a critical decision point this week.
