BLBG: Dollar May Weaken Near Term as Risk Appetite Revives, UBS Says
By Zijing Wu and Gavin Finch
July 28 (Bloomberg) -- The dollar may drop during the next month amid a revival in risk appetite, according to UBS AG, the world’s second-biggest currency trader.
“Our near-term bias is for further U.S. dollar weakness,” Gareth Berry, an analyst at UBS in London, wrote in a report today. “We see the chance of risk aversion returning and hence a stronger dollar on a three-month outlook.”
The U.S. currency depreciated 0.3 percent to $1.4279 per euro as of 11:36 a.m. in London. The dollar traded at $1.4304, breaching $1.4300 for the first time since June 3.
So-called speculative longs for the euro, Swiss franc, yen, Australian and Canadian dollars “have picked up recently, while positioning is still weak” for the pound, Berry said. A long position is a bet an asset price will increase.
“While dollar shorts accumulate, there are several risk factors ahead this week, including the first ever Sino-U.S. Strategic and Economic Dialogue in Washington and another round of heavy Treasury issuance,” he said.
To contact the reporters on this story: Zijing Wu in London zwu17@bloomberg.net; Gavin Finch in London at gfinch@bloomberg.net
