16-05-2025
- Business
- Wall Street Journal
Dollar Faces Further Falls as Correlation to Risk Shifts
1336 GMT – The breakdown in the positive correlation between risk aversion and the dollar could lead to further weakness for the currency, Neuberger Berman analysts say. U.S. investors might no longer see the dollar as a safe haven currency or unhedged dollar exposures as a source of diversification, they say. Investors are therefore evaluating whether to partially or fully hedge their exposure to the dollar, they say. Any level of hedging puts downward pressure on the dollar as investors sell dollars and buy currencies of their domicile. 'Non-U.S. investors will have to factor the efficacy of hedging their USD exposure relative to costs and implementation.' The DXY dollar index falls 0.1% to 100.763. (
0821 GMT – The euro could extend its current gains against the dollar slightly as speculators continue to bet against the U.S. currency, ING analyst Francesco Pesole says in a note. Markets and consensus forecasts seen to be aligning for two further interest-rate cuts by the European Central Bank this year, he says. However, the risks remain skewed towards a weaker dollar. 'We still see $1.120 as a good short-term anchor for the euro, although the bias seems to be for testing $1.130 rather than $1.110 in the short term on the back of lingering dollar strategic selling.' The euro rises 0.2% to $1.1208. (
