US Dollar Collapses to Two-Year Low at -3.5% YTD as Short Trades Hit Two-Year High

According to the research data analyzed and published by the ForexSchoolOnline.com, August 2020 saw the US dollar slip to its lowest level since June 2018. At the time, the world’s reserve currency slipped by -3.5% YTD as investors took an increasing number of short bets against it.

Moreover, the end of July saw hedge funds recording net longs on the euro. After having been on a tear since mid-May, spot price action on the EUR/USD hit a two-year high of $1.1908.

Net Shorts on USD Hit $24.27B, Highest Level Since August 2011

During the four-month period spanning April to July 2020, the dollar has been sold against its G10 peers. Calculations by Reuters and data from the US CFTC also reveal that net shorts on the US dollar soared to their highest level since August 2011, reaching $24.27 billion. Moreover, the dollar index shows that in July 2020, it recorded a monthly decline of more than 4%. This is its worst monthly drop since September 2010.

At the same time, investors are showing an increasing level of optimism with regard to a number of Asian currencies. A Reuters poll conducted in August shows that the Chinese yuan reached its highest number of long bets since early 2018. Another top performer in the region is the Philippine peso, which has reached its highest number of long bets since early 2013.

Goldman Sachs’ currency strategists have pointed to the rising value of gold as a cause for concern regarding the long-term status of the US dollar as the global reserve currency. Similarly, data from the Bank of Russia shows that it gets more euros than dollars for its exports to Russia. The figure rose from 0.3% in 2014 to 1.4% in Q2 2018. By the end of Q1 2020, however, it had shot up to 51%.

The full story, statistics and information can be found here: https://www.forexschoolonline.com/us-dollar-collapses-to-two-year-low-at-3-5-ytd-as-short-trades-hit-two-year-high/