US Dollar Extends Weekly Losses Amid Trade Talk Optimism

The U.S. dollar continues its downward trajectory as growing optimism around global trade negotiations prompts investors to shift away from the greenback toward alternative currencies.

Topic

Dollar Index Slumps

Trump’s Trade Policies Shake Markets

Speculators Raise Bearish Bets

Dollar Index Slumps

as Investors Favor Other Currencies

The Bloomberg Dollar Spot Index dropped by 0.8%, marking its fourth weekly loss in the past five weeks.
This decline reflects rising hopes for a trade agreement between the U.S. and China,
following China’s expressed willingness to resume tariff negotiations.
As a result, investors increased their exposure to Asian and commodity-linked currencies,
with the Japanese yen, Australian dollar, and New Zealand dollar all gaining over 1%.
Since the beginning of the year, the U.S. dollar has declined more than 6%,
highlighting a broader shift in market sentiment away from American assets.

Trump’s Trade Policies Shake Markets

and Erode Dollar’s Safe-Haven Status

Former President Donald Trump’s aggressive trade strategies have triggered significant volatility in financial markets.
Once viewed as a safe-haven asset, the dollar has lost favor among global investors.
The uncertainty caused by tariffs and trade tensions led to a broad sell-off of U.S. assets,
reversing years of capital inflows into American markets.
Although recent economic indicators and trade signals have offered temporary support to U.S. markets,
the overall market bias continues to lean toward selling U.S. dollar holdings and reallocating capital to foreign currencies.

Speculators Raise Bearish Bets

Despite Strong U.S. Jobs Report

Despite a better-than-expected U.S. employment report, speculators remain heavily tilted toward a bearish outlook for the dollar.
Data from the Commodity Futures Trading Commission (CFTC) shows that
hedge funds and asset managers increased their net short positions to approximately $17 billion, the highest level since last September.
Options markets also reflect this pessimism, with traders favoring put options (betting on a weaker dollar) over calls
(betting on a stronger dollar) ahead of the Federal Reserve’s interest rate decision on May 7.
Even though job data suggests resilience in the U.S. labor market, markets continue to price in further downside for the greenback.

US Dollar Extends Weekly Losses Amid Trade Talk Optimism

US Dollar Extends Weekly Losses Amid Trade Talk Optimism

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