By: Barbara Zigah
The U.S. Dollar continues to extend last Friday’s late rebound in Asian trading today, with the Dollar Index rising and pulling farther from the 10-month trough struck last week. As reported at 12:40 p.m. (JST) in Tokyo, the Dollar Index traded at 77.402 .DXY, a gain of .5%.
The U.S. Dollar also traded up against the common currency Euro, gaining .7% to trade at $1.3881, while the Australian Dollar, which on Friday briefly struck parity with the greenback, traded at $0.9847, a loss of .6% from the Friday record high. One trader in Japan suggested that the greenback could gain support in the short term provided that yields on longer-term Treasury instruments continue to rise.
With the prospect of additional quantitative easing measures being implemented soon by the Federal Reserve Bank, investors have increasingly bet against the greenback, a position that has some market players suggesting there is more room for another short-covering bounce.
For the week ending October 12th the net value of short positions in the greenback dropped to $29 billion, a decrease of $1.5 billion from the previous period. Last Friday, Ben Bernanke, the Fed chairman signaled again that the FOMC is ready to add more liquidity in to the U.S. economy.