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Speculators are betting on dollar's gain against euro

May 03, 2008|From Bloomberg News

Futures traders are betting for the first time since December 2005 that the dollar will gain against the euro.

The difference in the number of wagers by hedge funds and other large speculators on a decline in the euro compared with those on a gain, known as net shorts, was 21,315 on April 29, compared with net longs of 18,907 a week earlier, according to figures from the Commodity Futures Trading Commission in Washington.

"The dollar has already turned against the euro," said Benedikt Germanier, a currency strategist at UBS in Stamford, Conn. "The dollar will go to $1.52 in a straight line."

The dollar increased 0.3% on Friday to $1.5424 a euro. It touched $1.5361, the highest level since March 24.

The dollar rose 1.3% against the euro this week, its biggest rally since March, and has appreciated 3.6% from a record low of $1.6019 reached April 22.

It is the first time the dollar has posted two weeks of gains since December.

The currency rose after the Federal Reserve cut interest rates Wednesday and said substantial easing since September would help foster growth.

The Labor Department reported Friday that U.S. employers eliminated fewer jobs in April than forecast, indicating that the labor market was weathering the economic slowdown.

The U.S. Dollar Index, which measures the currency against six major counterparts, touched 73.698, the highest level since March 5. The index fell to 70.698 on March 17, the lowest level since its 1973 inception.

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