Breaking News

Betting Against The Fed And USD

By Ashraf LaidiForexJul 17, 2017 12:50AM ET
Betting Against The Fed And USD
By Ashraf Laidi   |  Jul 17, 2017 12:50AM ET
Saved. See Saved Items.
This article has already been saved in your Saved Items

The technical breakdowns in the US dollar after Friday's weak data releases raise deeply troubling questions about the currency. The Australian dollar was the best performer last week while the US dollar lagged. CFTC positioning showed the completion of the CAD-whipsaw.

USDX Speculative Net Longs
USDX Speculative Net Longs

You can indeed fight the Fed. Betting against the dollar this year has been the best FX trade, as it has over the last week. Policymakers' insistence that growth and inflation are picking up has been repeatedly undermined by soft data.

On Friday, retail sales and CPI data missed estimates and the market threw in the towel. The dollar was beaten up across the board and finished on the weekly lows. The lack of buyers at the lows points to more trouble ahead. In addition, a few dollar charts are breaking down. On Friday, cable rose to the highest since September 2016. Remember, the UK is facing political uncertainty, Brexit uncertainty and poor economic data.

NY Fed's Q3 2017 Nowcast GDP forecast remains at 1.8% and Q2 GDP forecast revised down to 1.9% from 2.0%.

Australia has also struggled this year but on Friday broke above a double-top at 0.7750 and finished the week just a handful of pips away from the 2016 high of 0.7835. CAD, EUR and everything else but USD/JPY is also in a precarious position.

Ultimately, it's still tough to bet against the Fed because they're only a few good data points away from raising rates again but the calendar is light until the final few days of July and that argues for more dollar weakness ahead.

CFTC Commitments of Traders

Speculative net futures trader positions as of the close on Tuesday. Net short denoted by - long by +.

EUR +84K vs +77K prior GBP -24K vs -28K prior JPY -112K vs -75K prior CHF 0K vs 0K prior CAD -9K vs -39K prior AUD +37K vs +32K prior NZD +32K vs +29K prior

The deeply misguided CAD-short trade has virtually been erased. The market piled into bets against the loonie on signs of trouble in the Canadian housing market the story proved to be a canard and the Bank of Canada massacred the trade. Ultimately, the market will get long CAD on signs of rising rates but it will need to lick its wounds first.

The other development is the shift to yen shorts. That's something we focused on last week. The BOJ is the only central bank that isn't making growing hawkish shift, and we learned on Thursday that inflation forecast might even be cut. Those shorts are likely in it for the long haul.

Betting Against The Fed And USD

Related Articles

Betting Against The Fed And USD

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind: 

  • Enrich the conversation
  • Stay focused and on track. Only post material that’s relevant to the topic being discussed.
  • Be respectful. Even negative opinions can be framed positively and diplomatically.
  •  Use standard writing style. Include punctuation and upper and lower cases.
  • NOTE: Spam and/or promotional messages and links within a comment will be removed
  • Avoid profanity, slander or personal attacks directed at an author or another user.
  • Don’t Monopolize the Conversation. We appreciate passion and conviction, but we also believe strongly in giving everyone a chance to air their thoughts. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at’s discretion.

Write your thoughts here
Are you sure you want to delete this chart?
Post also to:
Replace the attached chart with a new chart ?
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
Are you sure you want to delete this chart?
Replace the attached chart with a new chart ?
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.
Continue with Google
Sign up with Email