A SHAFAQNA TURKEY-Bloomberg poll showed that market participants were predicting a decline in the Bloomberg dollar index next month.
While the S&P Global manufacturing and composite PMIs to be announced in the US are expected to remain in the contraction zone below 50, depreciating from the previous month, the dollar depreciated early in the session against all G-10 currencies to data.
More than two-thirds of Bloomberg Markets Live (MLIV) Pulse respondents also said they expect the Bloomberg Dollar Index to decline next month.
It was the highest proportion of respondents who expected the dollar to fall since the poll began in August.
After falling 0.24% in October, the Bloomberg Dollar Index fell 4.83% and 1.83% in November and December, respectively.
While the weakening dollar has been effective this week, with expectations that the Fed’s interest rate hike will continue more moderately, dampening demand for safe investment vehicles, most other currencies are trading volume-limited due to the Chinese New Year.
What are the strategists saying?
“High risk appetite is putting pressure on the dollar,” said David Forrester, CIB strategist at Credit Agricole.
Investors may view dollar/yen above 130 as an opportunity to go short.
Markets Live strategist Simon Flint also noted that the biggest risk for the dollar to fall further is a change in risk perception in the markets.
Flint noted that the correlation between the Bloomberg dollar index and the MSCI global index is higher than the correlation with US bonds.
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