Dollar gains as investors unwind positions after weakest month in a decade
The dollar was up against a basket of currencies on Monday as investors unwound some recent short positions following the currency’s weakest monthly performance in a decade.
The dollar index, which measures the greenback against a basket of leading currencies, posted a more than 4% decline for July, its biggest monthly drop since September 2010.
The weakness has been tied to market expectations for further easing of U.S. monetary policy, and a lack of agreement among U.S. lawmakers on further fiscal stimulus. Falling U.S. bond yields have also been cited as a factor.
The dollar pared gains following weaker-than-expected U.S. economic data. U.S. construction spending fell to a one-year low in June; economists had forecast an increase.
The dollar index was last up 0.5% at 93.836.
Speculators’ net shorts on the U.S. dollar have soared to their highest since August 2011 at $24.27 billion, Reuters calculations and U.S. Commodity Futures Trading Commission data show.
Japanese Finance Minister Taro Aso described the yen’s recent rise as “rapid” on Friday, signaling concern that a strong currency could do more damage to an export-led economy already in recession.
The single currency last traded at $1.1727, down 0.4%. It hit a two-year high of $1.1908 reached last week.
Reference: CNBC
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