“Bullish bets on the US dollar increased to the highest level so far this year,” note Rabobank analysts.
Key quotes
“USD net long positions edged higher to 40,282 in the week ending November 6 – before the US mid-term elections resulted in the Democrats regaining control of the House and the Republicans tightening their grip on the Senate. While initially the dollar weakened on the back of the prospects of a political gridlock in Congress, it proved short-lived.”
“The greenback ended last week on a firm footing after the Fed reminded the markets that it intends to raise interest rates further in December and more hikes are likely in 2019 based on the dot plot. Apart from the interest rate differentials, the USD is also supported by prevailing concerns about trade war between the US and China.”
“In his latest tweet President Trump reiterated that the US cannot tolerate substantial trade deficits with other countries, including European allies: “Massive amounts of money spent on protecting other countries, and we get nothing but Trade Deficits and Losses. It is time that these very rich countries either pay the United States for its great military protection, or protect themselves…and Trade must be made FREE and FAIR!”
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