(Bloomberg) -- The Bloomberg Dollar Spot Index rose a second day as investors trimmed short positions amid thin flows before the U.S. holiday on Tuesday.
The dollar climbed versus all its Group-of-10 peers amid positioning rebalancing with little interest to add fresh longs, traders across Europe said. A drop in Treasuries supported the greenback, which rose to its strongest level versus the yen in more than six weeks. The Japanese currency was bid in early-Asia trading hours on news that Prime Minister Shinzo Abe's ruling party suffered a local election loss in Tokyo, only to quickly reverse course.
Sterling initially pared a drop in European trading, trading above $1.3020 on the back of street talk about a soft-Brexit, before slumping to a fresh day low at $1.2962 after a miss in the U.K. manufacturing PMI. Fast money accounts faded the recent sterling rally, while staying on lookout to add more on a possible test of the 2017 high of $1.3048, said the traders, who asked not to be identified as they weren't authorized to speak publicly. Stop and stop entries are located above option-related offers near that high, the traders added.
- The euro dropped below 1.1400 amid low volumes and found support from bids within 1.1375-90, traders said
- Further unwinding of euro longs could see the Draghi-speech breakout level near 1.1295 to be tested
- The euro-yen cross stayed bid and near its 16-month high on Thursday; still one-month risk reversals stayed under pressure and traded at 35bps in favor of EUR puts
- Since Bloomberg begun collecting data, one-month riskies in EUR/JPY have closed above par only during the November 2012-January 2013 period and in three days during August 2016
- WTI crude oil was on its best run this year, up an eighth day, helping CAD and NOK limit their losses versus the dollar
To contact the reporter on this story: Vassilis Karamanis in Athens at vkaramanis1@bloomberg.net.
To contact the editors responsible for this story: Ven Ram at vram1@bloomberg.net, David Goodman
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