SINGAPORE- The Canadian dollar and Australian dollar were in focus on Monday ahead of their central bank meetings this week, while the euro and other major currencies lost a bit more ground to a strong US dollar.
With a quarter-point rate cut by the Federal Reserve next week a near certainty as per market pricing, analysts say the dollar is looking tired after its long run-up in the four weeks since Donald Trump won the presidential election.
Morgan Stanley analysts even recommend being short US dollars into the year end, calling it a “pain trade” for markets that are widely and heavily long the currency.
“Much of the US dollar-positive story is in the price – from strong US data to trade and fiscal risks – and positioning is fairly long dollars,” they wrote.
Mizuho Bank strategist Vishnu Varathan pointed to a host of geopolitical developments, such as the weekend fall of Syrian President Bashar al-Assad’s regime, alongside macro- and Trump-related trades as providing markets further impetus to stay long dollars.
“There’s no incentive to short the dollar against any particular currency,” he said.
Against the yen, the dollar was flat around 149.93while the euro stood at $1.0537 down 0.27 percent so far in Asia and below Friday’s low of $1.0542. The dollar index rose 0.24 percent to 106.20.
Last week’s headliner, bitcoin which hit six-figures for the first time at a record $103,649, was last at $99,515.
The dollar rally lost momentum last week. The yen lost just 0.16 percent for the week, after spending most of it tight between 148.65 and 151.23. The euro was volatile after the collapse of France’s government but rallied to end the week up from two-year lows of $1.0332 hit at the end of November.
