According to the latest data from the Commodity Futures Trading Commission, the net short positions on the dollar reached $10.27 billion against its major peers. That is more than $2 billion net shorts added compared to a week earlier and the highest in six weeks.

The dollar’s decline followed three back-to-back monthly gains as data began to show the US economy recovering at an amazingly fast pace, leading to higher inflation expectations and bond yields suggesting sooner than anticipated tightening in monetary policy.

However, the Federal Reserve did not agree with the market’s view and remained committed to keeping monetary policy extremely loose last week at its policy meeting, setting a high bar for any start date to reduce the pace of its asset purchases. The Fed requires substantial further progress in reaching its employment goals before starting the tapering process. Given the US labour market remains 8.4 million jobs…

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