The US dollar weakened against most major currencies on Monday as traders reduced their significant bullish positions, just hours before Donald Trump’s second inauguration as President of the United States, Bloomberg reports.
A Bloomberg gauge tracking the dollar fell as much as 0.3%, as a phone call between President Trump and Chinese President Xi Jinping on Friday seemed to ease concerns over potential trade conflicts between the two economic giants. The reduced market activity due to a US holiday likely amplified the dollar’s decline against various currencies, including the Australian dollar and the offshore yuan.
This shift follows a period where speculative currency traders had accumulated bullish bets on the dollar to levels not seen since 2019, according to recent data from the Commodity Futures Trading Commission. This widespread belief in a stronger dollar, a popular trade since Trump’s election victory, has increased the potential for significant market volatility should these positions be reversed.
The New Zealand and Australian dollars, often used as indicators of market risk appetite, both gained ground against the greenback on Monday. The South Korean won, another currency vulnerable to fluctuations in global trade and growth, led the gains among Asian currencies
