US dollar to lose lustre on trade war jitters, long bets to decline further: Reuters poll

By Sarupya Ganguly

BENGALURU (Reuters) - The U.S. dollar whitethorn clasp astir of its spot implicit coming months, adjacent arsenic a once-crowded dollar commercialized thins retired amid disorder implicit U.S. President Donald Trump’s tariff plans and mounting worries astir the economy, a Reuters survey found.

After respective erratic announcements and delays, Trump has started a commercialized warfare with America’s 3 largest trading partners, levying 25% tariffs connected accepted allies Canada and Mexico and further import duties connected goods from China.

Combined with weeks of speculators unwinding near-decade precocious net-long dollar positions, that pushed the greenback down astir 2.5% against a handbasket of large currencies this week, according to information from the Commodity Futures Trading Commission.

A near-60% bulk of currency strategists, 18 of 31, successful a March 3-5 Reuters survey predicted net-long dollar bets would diminution further by end-March. Eight said determination would not beryllium overmuch change, portion lone 5 expected an summation successful nett agelong positions.

Responses to the latest FX canvass travel some earlier and aft the latest tariff announcements.

It was besides taken mostly earlier a surge successful the euro pursuing quality parties hoping to signifier Germany's adjacent authorities agreed connected Tuesday to make a 500 billion-euro ($534.75 billion) infrastructure money and overhaul borrowing rules to revamp the subject and revive maturation successful Europe's largest economy.

"The risks to the dollar outlook implicit the adjacent fewer months are even-sided. On the 1 hand, tariffs and elevated geopolitical uncertainty enactment a stronger dollar. On the different hand, shifts successful German fiscal argumentation and the disruption crossed aggregate fronts airs downside risks. We are truthful neutral," said George Saravelos, caput of FX probe astatine Deutsche Bank.

"The ample grade of uncertainty volition forestall a ample emergence successful dollar positioning successful some directions."

The euro, presently $1.07 and up astir 3% against the dollar since early-Monday, was expected to autumn to $1.03 successful 3 months and commercialized astatine $1.04 successful six, survey medians showed, astir the aforesaid arsenic successful a February survey, suggesting forecasts whitethorn soon beryllium revised.

From October to aboriginal January, the dollar roseate astir 10% connected continued resilience successful U.S. economical information and expectations the Federal Reserve had lone 1 oregon 2 much involvement complaint cuts near to deliver.

The dollar has since fallen astir 5%, with a bulk of those losses successful the past fewer weeks based connected signs of economical weakness, starring to involvement futures pricing 3 Fed complaint reductions by year-end.