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The US dollar rises after a weak Euro and strong positioning

USD - United States Dollar

The US dollar increased sharply by 0.39 percent amid a slightly choppy equity market ahead of results this week from tech companies and banks, even as energy stocks outperform.

One of the possible reasons for this sudden spike in the US dollar comes from sophisticated market participants’ positioning. Last week, the latest CFTC positioning (US Commodity Futures Trading Commission) saw that investors bought $ 1.1 billion of USD contracts and increased long USD positioning to $30.7 billion. This report has to be taken with a grain of salt given that this is a snapshot as of April 16, 2019, and the new buyers of the US dollar are aggregated.

Regarding the Fed, former presidential candidate Herman Cain's decision to drop out of the running for the Fed was widely expected, but his reason for doing so was surprising. Cain said his decision was really about having to, "…take a pay cut," go through a vetting process and being unable to, "…advocate on behalf of capitalism, host my radio show or make appearances on Fox Business." Trump also confirmed this decision through his Twitter account about Cain's decision.

Key Movers

Yesterday, oil importer currencies such as India (INR) and Turkey (TRY) suffered while exporters like Canada (CAD) strengthened.

Today, the EUR/USD pair was negatively affected after European equity banks slumped as ECB member Benoit Coeure dampened hopes for more aid for the financial sector. Benoit Coeure said he saw no reason for creating a tiered deposit rate that exempts banks from part of an ECB charge on their idle cash. The interest rate on the deposit facility is currently a negative 0.4 percent.

Furthermore, the Bank of Japan, Bank of Russia, Sweden’s Riksbank and Bank of Indonesia will set monetary policy this week.

Expected Ranges

USD/CAD: 1.3328 - 1.3439 ▲

EUR/USD: 1.1176 - 1.1245 ▼

GBP/USD: 1.2915 - 1.2981 ▼

AUD/USD: 0.7059 - 0.7110 ▼

NZD/USD: 0.6626 - 0.6668 ▼