Bets against the dollar unlikely to slow this quarter

Reuters
Monday November 12, 2007

Speculators are placing record bets against the U.S. dollar and analysts see no sign of that trend abating for now, suggesting Monday's big dollar rally may be short-lived.

Concerns about the strength of the U.S. economy, the outlook for U.S. interest rates compared with those elsewhere in the world and worry that U.S. financial institutions may divulge further losses from subprime mortgage exposure will weigh on the dollar for some time, analysts say.

"Everyone is piling on, it is the trade that works," said Win Thin, senior currency strategist at Brown Brothers Harriman, of shorting the greenback. "The dollar bear trend is still intact."

Net positions against the dollar grew for the fourth consecutive week to a peak of $32.54 billion in the period ended Nov. 6, up from $30.73 billion the prior week.

The data from the CFTC's Commitments of Traders report on speculative positioning is sometimes used by analysts as an indicator of future market direction. Extreme net short speculative positions may signal a coming bounce for a currency.

However, analysts say there is just too much working against the greenback right now for there to be a rebound.

Full article here.