Dollar Snaps Record Weekly Rally as Fed Rate Increase Bets Pared

16
Oct

Forex Trading Floors brings news on The Dollar from Bloomsberg.

The dollar snapped the longest weekly rally since the collapse of the Bretton Woods system in 1971 after the Federal Reserve expressed concern the currency’s strength posed a risk to the U.S. economic outlook.

Hungary’s forint and South Africa’s rand led gains against the greenback on optimism U.S. policy makers won’t accelerate increases in record low borrowing costs that have supported global growth. Russia’s ruble tumbled for a fourth week on sanctions and an oil-price slump, while Hungary’s forint rallied after the economy minister said the government needs a “favorable” exchange rate to cut public debt.

“This has been a very interesting week -- with the dollar, number one is clearly the minutes that we saw,” Nick Bennenbroek, head of currency strategy at Wells Fargo & Co., said in a phone interview. “What was really notable was the prominence the dollar got in the minutes in terms of Fed policy discussions.”

The U.S. Dollar Index, which Intercontinental Exchange Inc. uses the gauge to track the greenback against the currencies of six trade partners, fell 0.9 percent to 85.91 this week. It reached 86.75 on Oct. 3, the highest level since June 2010.

The index had rallied for 12 straight weeks, the longest since at least 1971 when currencies began to float after the U.S. abandoned the Bretton Woods system that pegged the dollar to the price of gold.

The greenback fell 0.9 percent to $1.2628 per euro, the biggest weekly decline in six months. The U.S. legal tender dropped 1.9 percent to 107.66 yen, while Europe’s single currency slipped 1 percent to 135.96 yen.

Hedge funds and other large speculators raised their net bullish dollar bets versus eight of its major peers to a record 313,878 contracts as of Oct. 7, compared with 281,204 a week earlier, according to data from the Washington-based Commodity Futures Trading Commission.

To read more on this article please click on the link below.

http://www.bloomberg.com/news/2014-10-11/dollar-snaps-record-weekly-rally-as-fed-rate-increase-bets-pared.html

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