Speculators have piled into the U.S. dollar in the wake of September’s global economic and financial turmoil.
Since late August, the dollar index has gained over 6 percent.
The IMM speculative positioning for the dollar in the week of Sept. 20 is the highest since June 2010, according to Credit Agricole.
If the global market downturn worsened – for example, if Greek debt defaults in a disorderly fashion – analysts predict the dollar could go even higher.
“There is still plenty of scope for risk aversion to intensify which could provide a major boost to the USD. The USD index is currently trading just over 78 but during the height of the financial crisis it rose to around 89, a further gain from current levels of around of around 14%,” said Credit Agricole in a research note.
Currently, the IMM positioning on dollar longs are 11.77.
It’s been in positive territory for only the second week and way below the all-time high of 24.83, according to Nomura Securities International.
During the European debt crisis of 2010, the IMM dollar longs managed to stay above 20 for six consecutive weeks.
Below is an IMM chart from Nomura.
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