Futures Traders Bet on Dollar Gain

Futures Traders Bet on Dollar Gain First Time Since 2005

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May 2 (Bloomberg) -- Futures traders are betting for the first time since December 2005 that the dollar will gain against the euro.

The difference in the number of wagers by hedge funds and other large speculators on a decline in the euro compared with those on a gain, known as net shorts, was 21,315 on April 29, compared with net longs of 18,907 a week earlier, figures from the Washington-based Commodity Futures Trading Commission show.

``The dollar has already turned against the euro,'' said Benedikt Germanier, a currency strategist at UBS AG in Stamford, Connecticut. ``The dollar will go to $1.52 in a straight line.''

The dollar increased 0.3 percent to $1.5424 per euro at 5 p.m. in New York, from $1.5474 yesterday. It touched $1.5361, the highest level since March 24.

The dollar rose 1.3 percent against the euro this week, its biggest rally since March, and has appreciated 3.6 percent from a record low of $1.6019 reached on April 22. It's the first time the dollar has posted two weeks of gains since December.

The currency rose after the Federal Reserve cut interest rates on April 30 and said ``substantial'' easing since September would help foster growth. The Labor Department reported today that U.S. employers eliminated fewer jobs in April than forecast, indicating the labor market is weathering the economic slowdown.

Payrolls shrank by 20,000 last month following a revised decline of 81,000 in March. The median forecast of 82 economists surveyed by Bloomberg News was for a drop of 75,000.

The yield advantage of two-year German bunds over comparable-maturity Treasuries has decreased to 1.40 percentage points from 1.85 percentage points on March 31, making dollar- denominated assets more attractive to investors.

The U.S. Dollar Index, which measures the currency against six major counterparts, touched 73.698, the highest level since March 5. The index fell to 70.698 on March 17, the lowest level since its 1973 inception.

Rogerdodger
Yesterday, 09:45 AM:

Jack Chan's charts show lots of money pulled out of energy and gold.
Makes me think it's about the dollar strengthening here.

Bernanke & Co. is 100% committed to trashing the dollar, and would happily let it fall another 50% from here if it could. But the currency market seems to have other ideas.

The dollar is also starting to price in the election as well marking the end of Premiere Bush's great legacy. The dollar topped out just he was sworn into office in 2001 so perhaps a major bottom being put in when he is on the way out shouldn't be much of a surprise. Don't think for a second that this means the end for the precious metals though. There is still huge amounts of inflation being built into the pipeline for release into the global economy.