2017 proved to be a poor year for the greenback, with the currency staging its weakest performance since 2003. of which which has a backdrop of three interest rate hikes, a tax reform bill of which encourages repatriation of U.S. dollars held overseas, a strengthening U.S. economy in addition to a soaring stock market. The justification has been of which while the Federal Reserve may have been in tightening mode, they were no longer the only players from the room. 2017 also saw the first hike in a decade out of the Bank of England in addition to even the ever-accommodative European Central Bank starting to scale back its stimulus. However, according to the latest CFTC Commitment of Traders Report, dollar positioning is usually starting the year quite short particularly against the euro (+$19.3 billion overall) which is usually the longest of which has been since 2007. Furthermore, the bond market is usually still only pricing in around two further rate hikes via the Fed of which year, even though Fed projections suggest three. Not to forget the changing composition of the Fed members in addition to the slight hawkish tilt to minutes suggesting an upside to growth.
August 14, 2018